Question 1

Refer to the graph shown which shows total product. At point B:

Accepted Answer

A) marginal product is at its minimum. 
B) marginal product is at its maximum. 
C) marginal product is zero. 
D) average product is at its maximum. 
A) marginal product is at its minimum. 
B) marginal product is at its maximum. 
C) marginal product is zero. 
D) average product is at its maximum.

Question 2

Refer to the table shown. Marginal cost is minimized when how many units of output are produced? $\begin{array}{|c|c|}
\hline   \text { Units of output } & \text { Total cost } \
\hline0 & 5 \
\hline 1 & 11 \
\hline 2 & 16 \
\hline 3 & 20 \
\hline 4 & 23 \
\hline 5 & 25 \
\hline 6 & 26 \
\hline
\end{array}$

Accepted Answer

A) 3 
B) 4 
C) 5 
D) 6 
A) 3 
B) 4 
C) 5 
D) 6

Question 3

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 4

Refer to the table shown. When average product is 8, total output is:

$\begin{array}{|c|c|}
\hline   \text { Number of workers } & \text { Marginal product of workers } \
\hline 1 & 5 \
\hline 2 & 7 \
\hline 3 & 8 \
\hline 4 & 10 \
\hline 5 & 11 \
\hline 6 & 7 \
\hline 7 & 5 \
\hline 8 & 3 \
\hline 9 & 0 \
\hline 10 & -1 \
\hline
\end{array}$

Accepted Answer

A) 20. 
B) 32. 
C) 40. 
D) 48. 
A) 20. 
B) 32. 
C) 40. 
D) 48.

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

If total cost is 100, total fixed cost is 30, and output is 20, average variable cost is 3.5.

Accepted Answer

A) True 
 B)False

Question 7

Costs that are spent and cannot be changed in the period of time under consideration are called:

Accepted Answer

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

Question 8

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 9

A business owner makes 50 items by hand in six hours. She could have earned $10 an hour working for someone else. If each item sells for $5 and the explicit costs total $14, economic profit equals:

Accepted Answer

A) $0. 
B) $74. 
C) $176. 
D) $236. 
A) $0. 
B) $74. 
C) $176. 
D) $236.

Question 10

Refer to the graph shown. This set of cost curves is:

Accepted Answer

A) correct. 
B) wrong because the ATC should be below the AVC. 
C) wrong because the marginal cost curve should go through the minimum points of the ATC and AVC curves in that order. 
D) wrong because the marginal cost curve should not intersect the average total cost curve. 
A) correct. 
B) wrong because the ATC should be below the AVC. 
C) wrong because the marginal cost curve should go through the minimum points of the ATC and AVC curves in that order. 
D) wrong because the marginal cost curve should not intersect the average total cost curve.

Question 11

When production increases, the average variable cost and average total cost curves:

Accepted Answer

A) spread farther apart. 
B) become horizontal. 
C) cross. 
D) move closer together. 
A) spread farther apart. 
B) become horizontal. 
C) cross. 
D) move closer together.

Question 12

A production table can be used to determine:

Accepted Answer

A) a firm's profits. 
B) a firm's costs. 
C) how much output is produced from a given quantity of inputs. 
D) how much of a product will be demanded by consumers. 
A) a firm's profits. 
B) a firm's costs. 
C) how much output is produced from a given quantity of inputs. 
D) how much of a product will be demanded by consumers.

Question 13

Implicit cost refers to:

Accepted Answer

A) the amount a firm receives for selling its product or service. 
B) any increase in the value of the assets owned by the firm. 
C) the opportunity cost of factors of production provided by the owners of the firm. 
D) salary paid to the factors of production. 
A) the amount a firm receives for selling its product or service. 
B) any increase in the value of the assets owned by the firm. 
C) the opportunity cost of factors of production provided by the owners of the firm. 
D) salary paid to the factors of production.

Question 14

Why are the MC and AVC curves U-shaped?

Accepted Answer

The MC and AVC curves are U-shaped becau

Question 15

The reason economists and accountants have problems using cost analysis in the real world is that:

Accepted Answer

A) economists do not believe in the existence of explicit costs. 
B) although implicit costs do not show up in accounting profits, they nevertheless affect managerial decisions. 
C) although explicit costs do not show up in accounting profits, they nevertheless affect managerial decisions. 
D) explicit costs cannot be measured. 
A) economists do not believe in the existence of explicit costs. 
B) although implicit costs do not show up in accounting profits, they nevertheless affect managerial decisions. 
C) although explicit costs do not show up in accounting profits, they nevertheless affect managerial decisions. 
D) explicit costs cannot be measured.

Question 16

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.

Question 17

Refer to the table shown. A firm would be least likely to hire:

$\begin{array}{|c|c|}
\hline   \text { Number of workers } & \text { Marginal product of workers } \
\hline 1 & 5 \
\hline 2 & 7 \
\hline 3 & 8 \
\hline 4 & 10 \
\hline 5 & 11 \
\hline 6 & 7 \
\hline 7 & 5 \
\hline 8 & 3 \
\hline 9 & 0 \
\hline 10 & -1 \
\hline
\end{array}$

Accepted Answer

A) 6 workers. 
B) 7 workers. 
C) 8 workers. 
D) 9 workers. 
A) 6 workers. 
B) 7 workers. 
C) 8 workers. 
D) 9 workers.

Question 18

Give the definition of fixed cost.What sorts of things might be included in fixed cost? Do fixed costs exist in the long run?

Accepted Answer

Fixed costs are costs of fixed inputs th

Question 19

Explain the relationship between marginal cost (MC)and average total cost (ATC).

Accepted Answer

If ATC is above MC,ATC is fall

Question 20

The law of diminishing marginal productivity holds:

Accepted Answer

A) when all inputs are variable. 
B) in the long run. 
C) when all inputs are fixed. 
D) in the short run. 
A) when all inputs are variable. 
B) in the long run. 
C) when all inputs are fixed. 
D) in the short run.

Exam 11: Production and Cost Analysis I

Refer to the graph shown which shows total product. At point B:

Refer to the table shown. Marginal cost is minimized when how many units of output are produced? Units of output Total cost 0 5 1 11 2 16 3 20 4 23 5 25 6 26

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

Refer to the table shown. When average product is 8, total output is: Number of workers Marginal product of workers 1 5 2 7 3 8 4 10 5 11 6 7 7 5 8 3 9 0 10 -1

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

If total cost is 100, total fixed cost is 30, and output is 20, average variable cost is 3.5.

Costs that are spent and cannot be changed in the period of time under consideration are called:

If marginal cost exceeds average total cost:

A business owner makes 50 items by hand in six hours. She could have earned $10 an hour working for someone else. If each item sells for $5 and the explicit costs total $14, economic profit equals:

Refer to the graph shown. This set of cost curves is:

When production increases, the average variable cost and average total cost curves:

A production table can be used to determine:

Implicit cost refers to:

Why are the MC and AVC curves U-shaped?

The reason economists and accountants have problems using cost analysis in the real world is that:

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:

Refer to the table shown. A firm would be least likely to hire: Number of workers Marginal product of workers 1 5 2 7 3 8 4 10 5 11 6 7 7 5 8 3 9 0 10 -1

Give the definition of fixed cost.What sorts of things might be included in fixed cost? Do fixed costs exist in the long run?

Explain the relationship between marginal cost (MC)and average total cost (ATC).

The law of diminishing marginal productivity holds:

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

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Microeconomic Policy, Economic Reasoning, and Beyond

Economic Growth, Business Cycles, and Unemployment

Measuring and Describing the Aggregate Economy

The Keynesian Short-Run Policy Model: Demand-Side Policies

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The Financial Sector and the Economy

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Financial Crises, Panics, and Unconventional Monetary Policy

Deficits and Debt: the Austerity Debate

The Fiscal Policy Dilemma

Jobs and Unemployment

Inflation, Deflation, and Macro Policy

International Financial Policy

Macro Policy in a Global Setting

Structural Stagnation and Globalization

Macro Policy in Developing Countries

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