Question 1

Economists use the term variable costs to refer to

Accepted Answer

A)  prices of inputs that are subject to sudden change,like fuel. 
B)  an increase in the price of any input. 
C)  costs that vary with the type of final product being produced. 
D)  costs that vary with the quantity of output produced. 
A)  prices of inputs that are subject to sudden change,like fuel. 
B)  an increase in the price of any input. 
C)  costs that vary with the type of final product being produced. 
D)  costs that vary with the quantity of output produced.

Question 2

Consider the following:

Accepted Answer

The answer of Consider the following:
  ...

Question 3

Caterpillar has spent $5 million to date on a new plant,and another $2 million is needed to complete the plant.When construction was started,it was projected that production at the new plant would add $12 million to Cat's profit,but new projections show the additional profit will be only $6 million.Assuming the incomplete plant is worthless,should Cat complete the new plant or abandon it?

Accepted Answer

A)  Cat should complete the plant because it would create a net profit of $4 million. 
B)  Cat should complete the plant because it would create a net profit of $1 million. 
C)  Cat should abandon the plant because a $5 million loss is better than a $7 million loss. 
D)  Cat should abandon the plant because it would create a net loss of $1 million.. 
A)  Cat should complete the plant because it would create a net profit of $4 million. 
B)  Cat should complete the plant because it would create a net profit of $1 million. 
C)  Cat should abandon the plant because a $5 million loss is better than a $7 million loss. 
D)  Cat should abandon the plant because it would create a net loss of $1 million..

Question 4

The marginal cost of producing tea can be measured in dollars per pound of tea.

Accepted Answer

A) True 
 B)False

Question 5

Marginal Cost of Production

The following questions refer to the following table which shows a firm's marginal cost of production.
 
-Refer to Marginal Cost of Production.Suppose the firm can sell as many units as it wants at a price of $20,then it should produce

Accepted Answer

A)  three units 
B)  four units 
C)  zero units 
D)  the number of units is indeterminate without more information 
A)  three units 
B)  four units 
C)  zero units 
D)  the number of units is indeterminate without more information

Question 6

A comic book company pays an annual licensing fee of $10,000 for the rights to an artist's character.Which would have the bigger effect on the readers of that character's comic: an increase in printing costs or an increase in the artist's licensing fee? Explain.

Accepted Answer

Higher printing costs would increase mar

Question 7

What is the variable cost of producing three units of output?

Accepted Answer

A)  $20. 
B)  $130. 
C)  $230. 
D)  Cannot be determined with the information available. 
A)  $20. 
B)  $130. 
C)  $230. 
D)  Cannot be determined with the information available.

Question 8

Economists generally assume that the firm's goal is to

Accepted Answer

A)  minimize its costs. 
B)  maximize its profit. 
C)  make its market share as large as possible. 
D)  maximize its production. 
A)  minimize its costs. 
B)  maximize its profit. 
C)  make its market share as large as possible. 
D)  maximize its production.

Question 9

If marginal cost exceeds marginal revenue,then a reduction in output will create higher profits.

Accepted Answer

A) True 
 B)False

Question 10

A sunk cost is one that

Accepted Answer

A)  does not vary with the level of output. 
B)  increases as the firm's production increases. 
C)  measures the value of the firm's self-owned resources. 
D)  can no longer be avoided. 
A)  does not vary with the level of output. 
B)  increases as the firm's production increases. 
C)  measures the value of the firm's self-owned resources. 
D)  can no longer be avoided.

Question 11

If an activity is worth pursuing at all,then the only information the decision maker needs to make a choice is

Accepted Answer

A)  total benefits. 
B)  marginal benefits and marginal costs. 
C)  variable costs. 
D)  fixed costs. 
A)  total benefits. 
B)  marginal benefits and marginal costs. 
C)  variable costs. 
D)  fixed costs.

Question 12

In order to maximize profits,firms should produce to the point where marginal revenue is equal to marginal cost.

Accepted Answer

A) True 
 B)False

Question 13

If a firm can sell one more unit of its product for $7 and the marginal cost of producing that one more unit is only $5,then it should definitely produce and sell one more unit.

Accepted Answer

A) True 
 B)False

Question 14

Higher fuel costs would cause a delivery firm to raise the price it charges.

Accepted Answer

A) True 
 B)False

Question 15

You are deciding whether or not to take your car on a 1,500 mile highway trip.Which of the following is the least likely to affect your decision?

Accepted Answer

A)  The price of gasoline. 
B)  The cost of oil changes. 
C)  Your annual insurance payment. 
D)  Highway tolls. 
A)  The price of gasoline. 
B)  The cost of oil changes. 
C)  Your annual insurance payment. 
D)  Highway tolls.

Question 16

If an activity is worth pursuing at all,then it should be pursued up to the point where

Accepted Answer

A)  total cost equals total benefit. 
B)  average cost equals average benefit. 
C)  marginal cost equals marginal benefit. 
D)  sunk costs equal zero. 
A)  total cost equals total benefit. 
B)  average cost equals average benefit. 
C)  marginal cost equals marginal benefit. 
D)  sunk costs equal zero.

Question 17

Either a rise in marginal cost or a fall in marginal revenue could cause a firm to reduce its output.

Accepted Answer

A) True 
 B)False

Question 18

A firm has MR = $70 and MC = $20 + Q.Fixed costs are $175.

Accepted Answer

The answer of A firm has MR = $70 and...

Question 19

Marginal Cost of Production

The following questions refer to the following table which shows a firm's marginal cost of production.
 
-Refer to Marginal Cost of Production.Suppose the firm has $20 in fixed costs.Its total cost of producing 5 units of output is

Accepted Answer

A)  $35. 
B)  $33. 
C)  $55. 
D)  $73. 
A)  $35. 
B)  $33. 
C)  $55. 
D)  $73.

Question 20

Suppose that the price of labor,the only variable input needed to produce cotton,increases from $100 day to $120 day.The effect on costs will be

Accepted Answer

A)  a parallel shift in the total cost curve. 
B)  a parallel shift in the fixed cost curve. 
C)  a parallel shift in the marginal cost curve. 
D)  a shift in total cost by different amounts for different quantities. 
A)  a parallel shift in the total cost curve. 
B)  a parallel shift in the fixed cost curve. 
C)  a parallel shift in the marginal cost curve. 
D)  a shift in total cost by different amounts for different quantities.

Economists use the term variable costs to refer to

Consider the following:

The marginal cost of producing tea can be measured in dollars per pound of tea.

Marginal Cost of Production The following questions refer to the following table which shows a firm's marginal cost of production. -Refer to Marginal Cost of Production.Suppose the firm can sell as many units as it wants at a price of $20,then it should produce

A comic book company pays an annual licensing fee of $10,000 for the rights to an artist's character.Which would have the bigger effect on the readers of that character's comic: an increase in printing costs or an increase in the artist's licensing fee? Explain.

What is the variable cost of producing three units of output?

Economists generally assume that the firm's goal is to

If marginal cost exceeds marginal revenue,then a reduction in output will create higher profits.

A sunk cost is one that

If an activity is worth pursuing at all,then the only information the decision maker needs to make a choice is

In order to maximize profits,firms should produce to the point where marginal revenue is equal to marginal cost.

If a firm can sell one more unit of its product for $7 and the marginal cost of producing that one more unit is only $5,then it should definitely produce and sell one more unit.

Higher fuel costs would cause a delivery firm to raise the price it charges.

You are deciding whether or not to take your car on a 1,500 mile highway trip.Which of the following is the least likely to affect your decision?

If an activity is worth pursuing at all,then it should be pursued up to the point where

Either a rise in marginal cost or a fall in marginal revenue could cause a firm to reduce its output.

A firm has MR = $70 and MC = $20 + Q.Fixed costs are $175.

Marginal Cost of Production The following questions refer to the following table which shows a firm's marginal cost of production. -Refer to Marginal Cost of Production.Suppose the firm has $20 in fixed costs.Its total cost of producing 5 units of output is

Suppose that the price of labor,the only variable input needed to produce cotton,increases from $100 day to $120 day.The effect on costs will be

Supply,demand,and Equilibrium

Prices,costs and Gains From Trade

The Behavior of Consumers

Consumers in the Marketplace

Production and Costs

Competition

Welfare Economics and the Gains From Trade

Knowledge and Information

Monopoly

Market Power,collusion,and Oligopoly

The Theory of Games

External Costs and Benefits

Common Property and Public Goods

The Demand for Factors of Production

The Market for Labor

Allocating Goods Over Time

Risk and Uncertainty

What Is Economics

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Exam 5: The Behavior of Firms

Economists use the term variable costs to refer to

Consider the following:

The marginal cost of producing tea can be measured in dollars per pound of tea.

Marginal Cost of Production The following questions refer to the following table which shows a firm's marginal cost of production. -Refer to Marginal Cost of Production.Suppose the firm can sell as many units as it wants at a price of $20,then it should produce

A comic book company pays an annual licensing fee of $10,000 for the rights to an artist's character.Which would have the bigger effect on the readers of that character's comic: an increase in printing costs or an increase in the artist's licensing fee? Explain.

What is the variable cost of producing three units of output?

Economists generally assume that the firm's goal is to

If marginal cost exceeds marginal revenue,then a reduction in output will create higher profits.

A sunk cost is one that

If an activity is worth pursuing at all,then the only information the decision maker needs to make a choice is

In order to maximize profits,firms should produce to the point where marginal revenue is equal to marginal cost.

If a firm can sell one more unit of its product for $7 and the marginal cost of producing that one more unit is only $5,then it should definitely produce and sell one more unit.

Higher fuel costs would cause a delivery firm to raise the price it charges.

You are deciding whether or not to take your car on a 1,500 mile highway trip.Which of the following is the least likely to affect your decision?

If an activity is worth pursuing at all,then it should be pursued up to the point where

Either a rise in marginal cost or a fall in marginal revenue could cause a firm to reduce its output.

A firm has MR = $70 and MC = $20 + Q.Fixed costs are $175.

Marginal Cost of Production The following questions refer to the following table which shows a firm's marginal cost of production. -Refer to Marginal Cost of Production.Suppose the firm has $20 in fixed costs.Its total cost of producing 5 units of output is

Suppose that the price of labor,the only variable input needed to produce cotton,increases from $100 day to $120 day.The effect on costs will be

Supply,demand,and Equilibrium

Prices,costs and Gains From Trade

The Behavior of Consumers

Consumers in the Marketplace

Production and Costs

Competition

Welfare Economics and the Gains From Trade

Knowledge and Information

Monopoly

Market Power,collusion,and Oligopoly

The Theory of Games

External Costs and Benefits

Common Property and Public Goods

The Demand for Factors of Production

The Market for Labor

Allocating Goods Over Time

Risk and Uncertainty

What Is Economics

Filters