Question 1

Fixed costs plus variable costs equal:

Accepted Answer

A)  total costs. 
B)  average total costs. 
C)  average costs. 
D)  marginal costs. 
A)  total costs. 
B)  average total costs. 
C)  average costs. 
D)  marginal costs.

Question 2

Refer to the graph shown. The line segment that represents average fixed costs of producing Q* is:

Accepted Answer

A)  AC. 
B)  CB. 
C)  AB. 
D)  cannot be determined. 
A)  AC. 
B)  CB. 
C)  AB. 
D)  cannot be determined.

Question 3

If marginal cost exceeds average total cost:

Accepted Answer

A)  average total cost decreases as output increases. 
B)  average fixed cost increases as output increases. 
C)  average variable cost increases as output increases. 
D)  average variable cost decreases as output increases. 
A)  average total cost decreases as output increases. 
B)  average fixed cost increases as output increases. 
C)  average variable cost increases as output increases. 
D)  average variable cost decreases as output increases.

Question 4

Accounting profit is equal to:

Accepted Answer

A)  implicit revenue minus implicit costs. 
B)  explicit revenue minus explicit measurable costs. 
C)  explicit revenue minus implicit and explicit costs. 
D)  implicit and explicit revenues minus implicit costs. 
A)  implicit revenue minus implicit costs. 
B)  explicit revenue minus explicit measurable costs. 
C)  explicit revenue minus implicit and explicit costs. 
D)  implicit and explicit revenues minus implicit costs.

Question 5

The following graph shows average fixed costs, average variable costs, average total costs, and marginal costs of production.   The average fixed cost curve is represented by which curve?

Accepted Answer

A)  I 
B)  II 
C)  III 
D)  IV 
A)  I 
B)  II 
C)  III 
D)  IV

Question 6

The minimum point of the average total cost curve always occurs at a larger output level than the minimum point of the average variable cost curve because:

Accepted Answer

A)  marginal cost is falling. 
B)  average fixed costs are rising. 
C)  average fixed costs are falling. 
D)  marginal cost is rising. 
A)  marginal cost is falling. 
B)  average fixed costs are rising. 
C)  average fixed costs are falling. 
D)  marginal cost is rising.

Question 7

Refer to the table shown. Marginal product declines when which worker is hired? $$\begin{array} { | c | c | } 
\hline \text { Number of workers } & \text { Mar ginal product of workers } \
\hline 1 & 2 \
\hline 2 & 5 \
\hline 3 & 9 \
\hline 4 & 14 \
\hline 5 & 16 \
\hline 6 & 17 \
\hline 7 & 18 \
\hline 8 & 18 \
\hline 9 & 17 \
\hline 10 & 15 \
\hline
\end{array}$$

Accepted Answer

A)  The 5th worker 
B)  The 6th worker 
C)  The 7th worker 
D)  The 9th worker 
A)  The 5th worker 
B)  The 6th worker 
C)  The 7th worker 
D)  The 9th worker

Question 8

Average fixed cost:

Accepted Answer

A)  remains constant and doesn't vary with output. 
B)  increases as output increases. 
C)  decreases as output increases. 
D)  equals total cost divided by output. 
A)  remains constant and doesn't vary with output. 
B)  increases as output increases. 
C)  decreases as output increases. 
D)  equals total cost divided by output.

Question 9

Refer to the following graph.   The marginal product and average product curves:

Accepted Answer

A)  are A and B, respectively. 
B)  are B and A, respectively. 
C)  could be either A or B. 
D)  are not drawn properly. 
A)  are A and B, respectively. 
B)  are B and A, respectively. 
C)  could be either A or B. 
D)  are not drawn properly.

Question 10

Refer to the graph shown. The line segment that represents average total costs of producing Q* is:

Accepted Answer

A)  AQ*. 
B)  BQ*. 
C)  CQ*. 
D)  AB. 
A)  AQ*. 
B)  BQ*. 
C)  CQ*. 
D)  AB.

Question 11

The following graph shows average fixed costs, average variable costs, average total costs, and marginal costs of production.   The average variable cost curve is represented by which curve?

Accepted Answer

A)  I 
B)  II 
C)  III 
D)  IV 
A)  I 
B)  II 
C)  III 
D)  IV

Question 12

Rachel left her job as a graphic artist, where she earned $42,000 per year, to open her own graphic arts firm. Her total costs of the new business include:

Accepted Answer

A)  only the expenses incurred for office space, equipment, and supplies. 
B)  only her forgone salary of $42,000 per year. 
C)  both the expenses incurred for office space, equipment, and supplies and her forgone salary of $42,000 per year. 
D)  neither the expenses incurred for office space, equipment, and supplies nor her forgone salary of $42,000 per year. 
A)  only the expenses incurred for office space, equipment, and supplies. 
B)  only her forgone salary of $42,000 per year. 
C)  both the expenses incurred for office space, equipment, and supplies and her forgone salary of $42,000 per year. 
D)  neither the expenses incurred for office space, equipment, and supplies nor her forgone salary of $42,000 per year.

Question 13

As output increases, average total cost always falls because average fixed cost declines.

Accepted Answer

A) True 
 B)False

Question 14

When the average variable cost curve is at its minimum point, average product will be:

Accepted Answer

A)  at its maximum. 
B)  increasing. 
C)  decreasing. 
D)  at its minimum. 
A)  at its maximum. 
B)  increasing. 
C)  decreasing. 
D)  at its minimum.

Question 15

The only variable input used in producing bicycles in a small factory is labor. Currently four workers are employed; each works 40 hours per week and is paid $10 per hour. If fixed cost is $2,000 per week and total output is 10 bicycles per week, average cost is:

Accepted Answer

A)  $160. 
B)  $260. 
C)  $200. 
D)  $360. 
A)  $160. 
B)  $260. 
C)  $200. 
D)  $360.

Question 16

If marginal cost is greater than average total cost, average total cost:

Accepted Answer

A)  is minimized. 
B)  is falling. 
C)  will not change. 
D)  is rising. 
A)  is minimized. 
B)  is falling. 
C)  will not change. 
D)  is rising.

Question 17

The following graph shows average fixed costs, average variable costs, average total costs, and marginal costs of production.   The distance EF represents:

Accepted Answer

A)  average variable cost. 
B)  average total cost. 
C)  average fixed cost. 
D)  marginal cost. 
A)  average variable cost. 
B)  average total cost. 
C)  average fixed cost. 
D)  marginal cost.

Question 18

Economic profit is:

Accepted Answer

A)  total revenue minus explicit measurable costs. 
B)  explicit revenues minus explicit costs. 
C)  implicit and explicit revenues minus implicit and explicit costs. 
D)  implicit and explicit revenues minus implicit costs. 
A)  total revenue minus explicit measurable costs. 
B)  explicit revenues minus explicit costs. 
C)  implicit and explicit revenues minus implicit and explicit costs. 
D)  implicit and explicit revenues minus implicit costs.

Question 19

If a firm's average fixed cost is $4 and its average total cost is $6, its average variable cost is:

Accepted Answer

A)  $1. 
B)  $2. 
C)  $10. 
D)  $20. 
A)  $1. 
B)  $2. 
C)  $10. 
D)  $20.

Question 20

If the average cost of producing 10 sweaters is $6.50 and the marginal cost of producing the tenth sweater is $6.75, the average cost of producing 10 sweaters will be:

Accepted Answer

A)  $6.50. 
B)  more than $6.50. 
C)  less than $6.50. 
D)  exactly $6.75. 
A)  $6.50. 
B)  more than $6.50. 
C)  less than $6.50. 
D)  exactly $6.75.

Exam 11: Production and Cost Analysis I

Fixed costs plus variable costs equal:

Refer to the graph shown. The line segment that represents average fixed costs of producing Q* is:

If marginal cost exceeds average total cost:

Accounting profit is equal to:

The following graph shows average fixed costs, average variable costs, average total costs, and marginal costs of production. The average fixed cost curve is represented by which curve?

The minimum point of the average total cost curve always occurs at a larger output level than the minimum point of the average variable cost curve because:

Refer to the table shown. Marginal product declines when which worker is hired? Number of workers Mar ginal product of workers 1 2 2 5 3 9 4 14 5 16 6 17 7 18 8 18 9 17 10 15

Average fixed cost:

Refer to the following graph. The marginal product and average product curves:

Refer to the graph shown. The line segment that represents average total costs of producing Q* is:

The following graph shows average fixed costs, average variable costs, average total costs, and marginal costs of production. The average variable cost curve is represented by which curve?

Rachel left her job as a graphic artist, where she earned $42,000 per year, to open her own graphic arts firm. Her total costs of the new business include:

As output increases, average total cost always falls because average fixed cost declines.

When the average variable cost curve is at its minimum point, average product will be:

The only variable input used in producing bicycles in a small factory is labor. Currently four workers are employed; each works 40 hours per week and is paid $10 per hour. If fixed cost is $2,000 per week and total output is 10 bicycles per week, average cost is:

If marginal cost is greater than average total cost, average total cost:

The following graph shows average fixed costs, average variable costs, average total costs, and marginal costs of production. The distance EF represents:

Economic profit is:

If a firm's average fixed cost is $4 and its average total cost is $6, its average variable cost is:

If the average cost of producing 10 sweaters is $6.50 and the marginal cost of producing the tenth sweater is $6.75, the average cost of producing 10 sweaters will be:

Economics and Economic Reasoning

The Production Possibility Model, Trade, and Globalization

Economic Institutions

Supply and Demand

Using Supply and Demand

Describing Supply and Demand: Elasticities

Taxation and Government Intervention

Market Failure Versus Government Failure

Comparative Advantage, Exchange Rates, and Globalization

International Trade Policy

Production and Cost Analysis II

Perfect Competition

Monopoly and Monopolistic Competition

Oligopoly and Antitrust Policy

Real-World Competition and Technology

Work and the Labor Market

Who Gets What the Distribution of Income

The Logic of Individual Choice: the Foundation of Supply and Demand

Game Theory, Strategic Decision Making, and Behavioral Economics

Thinking Like a Modern Economist

Behavioral Economics and Modern Economic Policy

Microeconomic Policy, Economic Reasoning, and Beyond

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