Question 1

A firm pays $50,000 for a machine that is used in production for one year,after which it is sold for $40,000 to another firm.The $10,000 difference is

Accepted Answer

A)  an explicit cost of production. 
B)  economic depreciation, an implicit cost of production. 
C)  normal profit. 
D)  not counted as an economic cost of production. 
E)  not an opportunity cost because it is not actually paid. 
A)  an explicit cost of production. 
B)  economic depreciation, an implicit cost of production. 
C)  normal profit. 
D)  not counted as an economic cost of production. 
E)  not an opportunity cost because it is not actually paid. B

Question 2

Which of the following variables do you need to know to calculate marginal cost?
i.change in total cost
ii.marginal product of labor
iii.change in quantity of labor used
iv.change in output

Accepted Answer

A)  i and ii 
B)  i and iv 
C)  ii and iv 
D)  i, iii, and iv 
E)  Only ii 
A)  i and ii 
B)  i and iv 
C)  ii and iv 
D)  i, iii, and iv 
E)  Only ii B

Question 3

The change in cost that results from a one-unit increase in output is called the

Accepted Answer

A)  average fixed cost. 
B)  per-unit variable cost. 
C)  per-unit total cost. 
D)  marginal cost. 
E)  average cost change. 
A)  average fixed cost. 
B)  per-unit variable cost. 
C)  per-unit total cost. 
D)  marginal cost. 
E)  average cost change. D

Question 4

Dr.Khan starts his own dental practice after quitting his $150,000 job at The Mall Dental Clinic.His revenues for the first year are $500,000.He paid $90,000 in rent for the dental office,$60,000 for his office manager's salary,$24,000 for the dental hygienist,$150,000 for insurance,and $6,000 for other miscellaneous costs.The normal profit from running his business is $20,000.

Accepted Answer

A)  His explicit costs are $330,000. 
B)  His implicit costs are $170,000. 
C)  His economic profit is zero. 
D)  Only answers A and C are correct. 
E)  Answers A, B, and C are correct. 
A)  His explicit costs are $330,000. 
B)  His implicit costs are $170,000. 
C)  His economic profit is zero. 
D)  Only answers A and C are correct. 
E)  Answers A, B, and C are correct.

Question 5

If a company triples its output and its average cost decreases,then the firm is definitely experiencing

Accepted Answer

A)  diseconomies of scale. 
B)  decreasing marginal returns. 
C)  increasing marginal returns. 
D)  economies of scale. 
E)  Both answers C and D are correct. 
A)  diseconomies of scale. 
B)  decreasing marginal returns. 
C)  increasing marginal returns. 
D)  economies of scale. 
E)  Both answers C and D are correct.

Question 6

Jill runs a factory that makes lie detectors in Little Rock,Arkansas.This month,Jill's 34 workers produced 680 machines.Jill's average product of labor equaled ________ lie detectors per worker.

Accepted Answer

A)  680 
B)  34 
C)  23 
D)  20 
E)  None of the above answers is correct. 
A)  680 
B)  34 
C)  23 
D)  20 
E)  None of the above answers is correct.

Question 7

Total cost includes

Accepted Answer

A)  the cost of variable resources only. 
B)  the cost of fixed resources only. 
C)  the cost of both variable and fixed resources. 
D)  the cost of neither variable nor fixed resources. 
E)  all explicit costs and all the implicit costs that actually must be paid using money. 
A)  the cost of variable resources only. 
B)  the cost of fixed resources only. 
C)  the cost of both variable and fixed resources. 
D)  the cost of neither variable nor fixed resources. 
E)  all explicit costs and all the implicit costs that actually must be paid using money.

Question 8

The U-shaped average total cost curve is

Accepted Answer

A)  a result of firms' wanting to find the output level where cost is at its minimum. 
B)  unrealistic because average total cost always increases as output increases. 
C)  the result of average fixed cost falling and decreasing marginal returns as output increases. 
D)  a result of constant marginal returns. 
E)  a result of increasing marginal returns. 
A)  a result of firms' wanting to find the output level where cost is at its minimum. 
B)  unrealistic because average total cost always increases as output increases. 
C)  the result of average fixed cost falling and decreasing marginal returns as output increases. 
D)  a result of constant marginal returns. 
E)  a result of increasing marginal returns.

Question 9

A firm decreases its scale of operation and discovers that its long-run average costs decrease.Which of the following does this indicate?

Accepted Answer

A)  Labor's marginal product has increased. 
B)  Diseconomies of scale were absent in the larger plant. 
C)  The firm's scale initially was so large that it experienced diseconomies of scale. 
D)  The firm's scale initially was too small to experience economies of scale. 
E)  Its long-run marginal cost was smaller with the larger plant than with the smaller plant. 
A)  Labor's marginal product has increased. 
B)  Diseconomies of scale were absent in the larger plant. 
C)  The firm's scale initially was so large that it experienced diseconomies of scale. 
D)  The firm's scale initially was too small to experience economies of scale. 
E)  Its long-run marginal cost was smaller with the larger plant than with the smaller plant.

Question 10

To produce 10 shirts,the total cost is $80; to produce 11 shirts,the total cost is $99.The average total cost of the 11th shirt is equal to

Accepted Answer

A)  $8. 
B)  $9. 
C)  $80. 
D)  $99. 
E)  $19. 
A)  $8. 
B)  $9. 
C)  $80. 
D)  $99. 
E)  $19.

Question 11

Total fixed cost is the cost of

Accepted Answer

A)  labor. 
B)  production. 
C)  a firm's fixed factors of production. 
D)  only implicit factors of production. 
E)  only explicit factors of production. 
A)  labor. 
B)  production. 
C)  a firm's fixed factors of production. 
D)  only implicit factors of production. 
E)  only explicit factors of production.

Question 12

A firm increases its output and its average total costs remain unchanged.Is the firm experiencing increasing returns to scale,constant returns to scale,or decreasing returns to scale?

Accepted Answer

The firm is experien

Question 13

$$\begin{array} { c c } 
\begin{array} { c } 
\text { Quantity of labor } \
\text { (w orkers) }
\end{array} & \begin{array} { c } 
\text { Total produet } \
\text { (hair stylings per day) }
\end{array} \
\hline 0 & 0 \
1 & 10 \
2 & 25 \
3 & 45 \
4 & 60 \
5 & 70 \
\hline
\end{array}$$
-The above table shows the total product schedule for Hair Today,a hair styling salon.
a.What is the first worker's marginal product? The second worker? The third worker? The fourth worker? The fifth worker?
b.Over what range of workers is there increasing marginal returns? Over what range is there decreasing marginal returns?

Accepted Answer

a.The first worker's marginal product is

Question 14

A normal profit is defined as

Accepted Answer

A)  total revenue minus explicit costs. 
B)  the same thing as accounting profit. 
C)  the return to entrepreneurship. 
D)  total revenue minus implicit costs. 
E)  the economic profit minus the implicit costs. 
A)  total revenue minus explicit costs. 
B)  the same thing as accounting profit. 
C)  the return to entrepreneurship. 
D)  total revenue minus implicit costs. 
E)  the economic profit minus the implicit costs.

Question 15

The average total cost curve is U-shaped.At the quantity of output where average total cost is at its minimum,is the marginal cost curve above the average total cost curve,below the average total cost curve,or intersecting the average total cost curve?

Accepted Answer

When the average total cost is at its mi

Question 16

Bill is an economics professor who earns $37,000 teaching but decides to leave and fulfill his dream of catering barbecues.During his year of barbecuing he earned total revenue of $60,000.He spent $30,000 on food and supplies.He also paid his wife $10,000 to help serve food.The normal profit for an entrepreneur running a barbecue business is $3,000.Bill also rented an industrial grill/fry truck for $12,000.Bill had an economic

Accepted Answer

A)  profit of $20,000. 
B)  loss of -$32,000. 
C)  loss of -$42,000. 
D)  profit of $28,000. 
E)  profit of zero. 
A)  profit of $20,000. 
B)  loss of -$32,000. 
C)  loss of -$42,000. 
D)  profit of $28,000. 
E)  profit of zero.

Question 17

Which of the following is FALSE?

Accepted Answer

A)  Long-run average variable costs equal long-run average total costs. 
B)  Fixed costs increase in the long run. 
C)  As a firm produces more output, eventually it experiences diseconomies of scale. 
D)  In the long run, both the amount of capital and labor used by the firm can be changed. 
E)  In the long run, the firm has no fixed inputs. 
A)  Long-run average variable costs equal long-run average total costs. 
B)  Fixed costs increase in the long run. 
C)  As a firm produces more output, eventually it experiences diseconomies of scale. 
D)  In the long run, both the amount of capital and labor used by the firm can be changed. 
E)  In the long run, the firm has no fixed inputs.

Question 18

In the long run,if 1,000 units are produced at a cost of $8,000 and 1,200 units at a cost of $9,200,then over this range of output there are

Accepted Answer

A)  constant economies of scale. 
B)  constant returns to scale. 
C)  diseconomies of scale. 
D)  economies of scale. 
E)  constant diseconomies of scale. 
A)  constant economies of scale. 
B)  constant returns to scale. 
C)  diseconomies of scale. 
D)  economies of scale. 
E)  constant diseconomies of scale.

Question 19

Draw an average total cost curve,an average variable cost,and a marginal cost curve all on the same graph.Make sure to correctly label the axes.What relationship must exist between the marginal cost curve and the average total cost and average variable cost curves?

Accepted Answer

@#IMG-DLM& Typical cost curves are above.The avera

Question 20

In the long run all costs are variable costs.Why?

Accepted Answer

The long run is defined as the time fram

A firm pays $50,000 for a machine that is used in production for one year,after which it is sold for $40,000 to another firm.The $10,000 difference is

Which of the following variables do you need to know to calculate marginal cost? i.change in total cost ii.marginal product of labor iii.change in quantity of labor used iv.change in output

The change in cost that results from a one-unit increase in output is called the

If a company triples its output and its average cost decreases,then the firm is definitely experiencing

Jill runs a factory that makes lie detectors in Little Rock,Arkansas.This month,Jill's 34 workers produced 680 machines.Jill's average product of labor equaled ________ lie detectors per worker.

Total cost includes

The U-shaped average total cost curve is

A firm decreases its scale of operation and discovers that its long-run average costs decrease.Which of the following does this indicate?

To produce 10 shirts,the total cost is $80; to produce 11 shirts,the total cost is $99.The average total cost of the 11th shirt is equal to

Total fixed cost is the cost of

A firm increases its output and its average total costs remain unchanged.Is the firm experiencing increasing returns to scale,constant returns to scale,or decreasing returns to scale?

A normal profit is defined as

The average total cost curve is U-shaped.At the quantity of output where average total cost is at its minimum,is the marginal cost curve above the average total cost curve,below the average total cost curve,or intersecting the average total cost curve?

Which of the following is FALSE?

In the long run,if 1,000 units are produced at a cost of $8,000 and 1,200 units at a cost of $9,200,then over this range of output there are

Draw an average total cost curve,an average variable cost,and a marginal cost curve all on the same graph.Make sure to correctly label the axes.What relationship must exist between the marginal cost curve and the average total cost and average variable cost curves?

In the long run all costs are variable costs.Why?

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Exam 14: Production and Cost

A firm pays $50,000 for a machine that is used in production for one year,after which it is sold for $40,000 to another firm.The $10,000 difference is

Which of the following variables do you need to know to calculate marginal cost? i.change in total cost ii.marginal product of labor iii.change in quantity of labor used iv.change in output

The change in cost that results from a one-unit increase in output is called the

If a company triples its output and its average cost decreases,then the firm is definitely experiencing

Jill runs a factory that makes lie detectors in Little Rock,Arkansas.This month,Jill's 34 workers produced 680 machines.Jill's average product of labor equaled ________ lie detectors per worker.

Total cost includes

The U-shaped average total cost curve is

A firm decreases its scale of operation and discovers that its long-run average costs decrease.Which of the following does this indicate?

To produce 10 shirts,the total cost is $80; to produce 11 shirts,the total cost is $99.The average total cost of the 11th shirt is equal to

Total fixed cost is the cost of

A firm increases its output and its average total costs remain unchanged.Is the firm experiencing increasing returns to scale,constant returns to scale,or decreasing returns to scale?

A normal profit is defined as

The average total cost curve is U-shaped.At the quantity of output where average total cost is at its minimum,is the marginal cost curve above the average total cost curve,below the average total cost curve,or intersecting the average total cost curve?

Which of the following is FALSE?

In the long run,if 1,000 units are produced at a cost of $8,000 and 1,200 units at a cost of $9,200,then over this range of output there are

Draw an average total cost curve,an average variable cost,and a marginal cost curve all on the same graph.Make sure to correctly label the axes.What relationship must exist between the marginal cost curve and the average total cost and average variable cost curves?

In the long run all costs are variable costs.Why?

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters