Question 1

Average total cost will increase if __________.

Accepted Answer

marginal cost exceeds ATC.

Question 2

Table 13-10
Teacher's Helper is a small company that has a subcontract to produce instructional materials for disabled children in public school districts. The owner rents several small rooms in an office building in the suburbs for $600 a month and has leased computer equipment that costs $480 a month.
​
​
 \[\begin{array} { | c | c | c | c | c | c | c | c | } 
\hline \begin{array} { c } 
\text { Output } \
\text { (Instructional } \
\text { modules per } \
\text { month) }
\end{array} & \begin{array} { c } 
\text { Fixed } \
\text { Cost } \
\text { (Dollars) }
\end{array} & \begin{array} { c } 
\text { Variable } \
\text { Cost } \
\text { (Dollars) }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Cost } \
\text { (Dollars) }
\end{array} & \begin{array} { c } 
\text { Marginal } \
\text { Cost } \
\text { (Dollars) }
\end{array} & \begin{array} { c } 
\text { Average } \
\text { Fixed Cost } \
\text { (Dollars } \
\text { per unit) }
\end{array} & \begin{array} { c } 
\text { Average } \
\text { Variable } \
\text { Cost } \
\text { (Dollars per } \
\text { unit) }
\end{array} & \begin{array} { c } 
\text { Average } \
\text { Total Cost } \
\text { (Dollars } \
\text { per unit) }
\end{array} \
\hline 0 & 1,080 & & & & & & \
\hline 1 & 1,080 & 400 & 1480 & 400 & & & \
\hline 2 & & & & 450 & & & 965\
\hline 3 & & 1,350 & 2,430 & & & & \
\hline 4 & & 1,900 & & & & 475& \
\hline 5 & & 2,500 & & & 216 & & \
\hline 6 & & & 4,280 & 700 & & & \
\hline 7 & & 4,100 & & & & & \
\hline 8 & & 5,400 & & &135 & & \
\hline 9 & & 7,300 & & & & & \
\hline 10 & & & 10,880 & & & 980 & \
\hline
\end{array}\] ​
​
​
-If marginal cost is rising,

Accepted Answer

A) average variable cost must be falling. 
B) average fixed cost must be rising. 
C) marginal product must be falling. 
D) marginal product must be rising. 
A) average variable cost must be falling. 
B) average fixed cost must be rising. 
C) marginal product must be falling. 
D) marginal product must be rising. C

Question 3

What might cause economies of scale?

Accepted Answer

specialization of labor

Question 4

The average-fixed-cost curve is constant.

Accepted Answer

A) True 
 B)False

Question 5

Table 13-5
The following table shows the production and costs for the Wooden Chair Factory.
​
​
 $$\begin{array} { | c | c | c | c | c | c | c | } 
\hline \begin{array} { c } 
\text { Labor } \
\text { (Number of } \
\text { workers) }
\end{array} & \begin{array} { c } 
\text { Capital } \
\text { (Number of } \
\text { machines) }
\end{array} & \begin{array} { c } 
\text { Output } \
\text { (Chairs } \
\text { produced per } \
\text { hour) }
\end{array} & \begin{array} { c } 
\text { Marginal } \
\text { Product of } \
\text { Labor } \
\text { (Chairs } \
\text { produced per } \
\text { hour) }
\end{array} & \begin{array} { c } 
\text { Cost of } \
\text { Workers } \
\text { (Dollars) }
\end{array} & \begin{array} { c } 
\text { Cost of } \
\text { Machines } \
\text { (Dollars }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Cost } \
\text { (Dollars) }
\end{array} \
\hline 1 & 2 & 5 & & & & \
\hline 2 & 2 & 10 & & & & \
\hline 3 & 2 & 20 & & & & \
\hline 4 & 2 & 35 & & & & \
\hline 5 & 2 & 55 & & & & \
\hline 6 & 2 & 70 & & & & \
\hline 7 & 2 & 80 & & & & \
\hline
\end{array}$$ ​
-Refer to Table 13-5. Each worker at the Wooden Chair Factory costs $12 per hour. The cost of each machine is $20 per day regardless of the number of chairs produced. What is the total daily cost of producing at a rate of 55 chairs per hour if the factory operates 8 hours per day?

Accepted Answer

A) $480 
B) $576 
C) $520 
D) $616 
A) $480 
B) $576 
C) $520 
D) $616

Question 6

Which of the following costs of publishing a book is a fixed cost?

Accepted Answer

A) Author royalties of 5 percent per book 
B) The costs of paper and binding 
C) Shipping and postage expenses 
D) Composition, typesetting, and jacket design for the book 
A) Author royalties of 5 percent per book 
B) The costs of paper and binding 
C) Shipping and postage expenses 
D) Composition, typesetting, and jacket design for the book

Question 7

The most likely explanation for economies of scale is

Accepted Answer

A) coordination problems. 
B) specialization of labor. 
C) increasing marginal cost. 
D) decreasing marginal cost. 
A) coordination problems. 
B) specialization of labor. 
C) increasing marginal cost. 
D) decreasing marginal cost.

Question 8

Figure 13-2   ​
-Refer to Figure 13-2. Curve A intersects curve B

Accepted Answer

A) where the firm maximizes production. 
B) at the minimum of average fixed cost. 
C) at the efficient scale. 
D) where fixed costs equal variable costs. 
A) where the firm maximizes production. 
B) at the minimum of average fixed cost. 
C) at the efficient scale. 
D) where fixed costs equal variable costs.

Question 9

Table 13-1
​
​
 $$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Labor } \
\text { (Number of W orkers) }
\end{array} & \begin{array} { c } 
\text { Output } \
\text { (Units) }
\end{array} & \begin{array} { c } 
\text { Marginal Product } \
\text { (Units) }
\end{array} \
\hline 0 & 0 & - \
\hline 1 & & 30 \
\hline 2 & & 45 \
\hline 3 & & 60 \
\hline 4 & & 50 \
\hline 5 & & 40 \
\hline
\end{array}$$ ​
-Refer to Table 13-1. What is total output when 1 worker is hired?

Accepted Answer

A) 10 
B) 30 
C) 45 
D) 75 
A) 10 
B) 30 
C) 45 
D) 75

Question 10

If the marginal cost of producing the tenth unit of output is $2.50, and if the average total cost of producing the tenth unit of output is $3, then at ten units of output, average total cost is rising.

Accepted Answer

A) True 
 B)False

Question 11

Table 13-10
Teacher's Helper is a small company that has a subcontract to produce instructional materials for disabled children in public school districts. The owner rents several small rooms in an office building in the suburbs for $600 a month and has leased computer equipment that costs $480 a month.
​
​
 \[\begin{array} { | c | c | c | c | c | c | c | c | } 
\hline \begin{array} { c } 
\text { Output } \
\text { (Instructional } \
\text { modules per } \
\text { month) }
\end{array} & \begin{array} { c } 
\text { Fixed } \
\text { Cost } \
\text { (Dollars) }
\end{array} & \begin{array} { c } 
\text { Variable } \
\text { Cost } \
\text { (Dollars) }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Cost } \
\text { (Dollars) }
\end{array} & \begin{array} { c } 
\text { Marginal } \
\text { Cost } \
\text { (Dollars) }
\end{array} & \begin{array} { c } 
\text { Average } \
\text { Fixed Cost } \
\text { (Dollars } \
\text { per unit) }
\end{array} & \begin{array} { c } 
\text { Average } \
\text { Variable } \
\text { Cost } \
\text { (Dollars per } \
\text { unit) }
\end{array} & \begin{array} { c } 
\text { Average } \
\text { Total Cost } \
\text { (Dollars } \
\text { per unit) }
\end{array} \
\hline 0 & 1,080 & & & & & & \
\hline 1 & 1,080 & 400 & 1480 & 400 & & & \
\hline 2 & & & & 450 & & & 965\
\hline 3 & & 1,350 & 2,430 & & & & \
\hline 4 & & 1,900 & & & & 475& \
\hline 5 & & 2,500 & & & 216 & & \
\hline 6 & & & 4,280 & 700 & & & \
\hline 7 & & 4,100 & & & & & \
\hline 8 & & 5,400 & & &135 & & \
\hline 9 & & 7,300 & & & & & \
\hline 10 & & & 10,880 & & & 980 & \
\hline
\end{array}\] ​
​
​
-Refer to Table 13-10. What is the average variable cost for the month if 6 instructional modules are produced?

Accepted Answer

A) $180.00 
B) $533.33 
C) $700.00 
D) $713.33 
A) $180.00 
B) $533.33 
C) $700.00 
D) $713.33

Question 12

Table 13-9
​
​
 $$\begin{array} { | c | c | c | c | } 
\hline \begin{array} { c } 
\text { Labor } \
\text { (Number of w orkers) }
\end{array} & \begin{array} { c } 
\text { Output } \
\text { (Units) }
\end{array} & \begin{array} { c } 
\text { Fixed Cost } \
\text { (Dollars) }
\end{array} & \begin{array} { c } 
\text { Variable Cost } \
\text { (Dollars) }
\end{array} \
\hline 0 & 0 & 30 & 0 \
\hline 1 & 100 & 30 & 15 \
\hline 2 & 180 & 30 & 30 \
\hline 3 & 240 & 30 & 45 \
\hline 4 & 280 & 30 & 60 \
\hline 5 & 300 & 30 & 75 \
\hline
\end{array}$$
-Refer to Table 13-9. For the firm whose production function and costs are specified in the table, its average-total-cost curve is

Accepted Answer

A) constant. 
B) decreasing. 
C) increasing. 
D) U-shaped. 
A) constant. 
B) decreasing. 
C) increasing. 
D) U-shaped.

Question 13

If the marginal cost of producing the fifth unit of output is higher than the marginal cost of producing the fourth unit of output, then at five units of output, average total cost must be rising.

Accepted Answer

A) True 
 B)False

Question 14

Scenario 13-3
Diamond is an organic brocolli farmer, but she also spends part of her day as a professional organizing consultant. As a consultant, Diamond helps people organize their houses. Due to the popularity of her home-organization services, Farmer Diamond has more clients requesting her services than she has time to help if she maintains her farming business. Farmer Diamond charges $45 an hour for her home-organization services. One spring day, Diamond spends 8 hours in her fields planting $130 worth of seeds on her farm. She expects that the seeds she planted will yield $300 worth of brocolli.
-Refer to Scenario 13-3. Diamond's accountant would calculate the total cost for the day of farming to equal

Accepted Answer

A) $45. 
B) $130. 
C) $300. 
D) $380. 
A) $45. 
B) $130. 
C) $300. 
D) $380.

Question 15

The economic field of industrial organization examines how firms' decisions about prices and quantities depend on the market conditions they face.

Accepted Answer

A) True 
 B)False

Question 16

Figure 13-6
The following figure depicts average total cost functions for a firm that produces automobiles.   ​
​
​
-Refer to Figure 13-6. The firm experiences economies of scale at which output levels?

Accepted Answer

A) Output levels less than P 
B) Output levels between P and Q 
C) Output levels greater than Q 
D) Output level greater than P 
A) Output levels less than P 
B) Output levels between P and Q 
C) Output levels greater than Q 
D) Output level greater than P

Question 17

Economies of scale often arise because higher production levels allow specialization among workers.

Accepted Answer

A) True 
 B)False

Question 18

Scenario 13-2
Kachina is a senior majoring in graphic design at Awesome University (AU). While she has been attending college, Kachina started a computer consulting business to help senior citizens learn how to use their iPads. Kachina charges $25 per hour for her consulting services. She also works 5 hours a week for the Economics Department to maintain that department's Web page. The Economics Department pays Kachina $20 per hour.
-Refer to Scenario 13-2. If Kachina can work additional hours at either job, what is the opportunity cost if she spends one hour reading a novel?

Accepted Answer

A) $20 
B) $25 
C) $100 
D) $125 
A) $20 
B) $25 
C) $100 
D) $125

Question 19

Table 13-13
Listed in the table are the long-run total costs for three different firms.
 $$\begin{array} { | l | l | l | l | l | l | } 
\hline \text { uantity } & \mathbf { 2 } & \mathbf { 2 } & \mathbf { 3 } & \mathbf { 4 } & \mathbf { 5 } \
\hline \text { Firm A } & 100 & 100 & 100 & 100 & 100 \
\hline \text { Firm B } & 100 & 200 & 300 & 400 & 500 \
\hline \text { Firm C } & 100 & 300 & 600 & 1,000 & 1,500 \
\hline
\end{array}$$
-Refer to Table 13-13. Firm C is experiencing diseconomies of scale.

Accepted Answer

A) True 
 B)False

Question 20

Economic profit is greater than or equal to accounting profit.

Accepted Answer

A) True 
 B)False

Exam 13: The Costs of Production

Average total cost will increase if __________.

What might cause economies of scale?

The average-fixed-cost curve is constant.

Which of the following costs of publishing a book is a fixed cost?

The most likely explanation for economies of scale is

Figure 13-2 ​ -Refer to Figure 13-2. Curve A intersects curve B

Table 13-1 ​ ​ Labor (Number of W orkers) Output (Units) Marginal Product (Units) 0 0 - 1 30 2 45 3 60 4 50 5 40 ​ -Refer to Table 13-1. What is total output when 1 worker is hired?

If the marginal cost of producing the tenth unit of output is $2.50, and if the average total cost of producing the tenth unit of output is $3, then at ten units of output, average total cost is rising.

If the marginal cost of producing the fifth unit of output is higher than the marginal cost of producing the fourth unit of output, then at five units of output, average total cost must be rising.

The economic field of industrial organization examines how firms' decisions about prices and quantities depend on the market conditions they face.

Figure 13-6 The following figure depicts average total cost functions for a firm that produces automobiles. ​ ​ ​ -Refer to Figure 13-6. The firm experiences economies of scale at which output levels?

Economies of scale often arise because higher production levels allow specialization among workers.

Table 13-13 Listed in the table are the long-run total costs for three different firms. uantity Firm A 100 100 100 100 100 Firm B 100 200 300 400 500 Firm C 100 300 600 1,000 1,500 -Refer to Table 13-13. Firm C is experiencing diseconomies of scale.

Economic profit is greater than or equal to accounting profit.

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Applications: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters

Figure 13-2 -Refer to Figure 13-2. Curve A intersects curve B

Table 13-1 Labor (Number of W orkers) Output (Units) Marginal Product (Units) 0 0 - 1 30 2 45 3 60 4 50 5 40 -Refer to Table 13-1. What is total output when 1 worker is hired?

Figure 13-6 The following figure depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-6. The firm experiences economies of scale at which output levels?