Question 1

In determining a firm's costs, accountants include _____ costs, and economists include _____ costs.

Accepted Answer

A)  implicit; no implicit 
B)  implicit; no explicit 
C)  implicit and explicit; no implicit 
D)  explicit; implicit and explicit 
A)  implicit; no implicit 
B)  implicit; no explicit 
C)  implicit and explicit; no implicit 
D)  explicit; implicit and explicit D

Question 2

_____ costs are short-run costs that do not change with the quantity of output.

Accepted Answer

A)  Marginal 
B)  Total 
C)  Variable 
D)  Fixed 
A)  Marginal 
B)  Total 
C)  Variable 
D)  Fixed D

Question 3

(Figure: Cost Schedule) In the figure, what is the average total cost to produce 4 units?
 $\begin{array}{|c|c|c|c|}
\hline \text { Quantity } & \text { Fixed Cost } & \begin{array}{c}
\text { Variable } \
\text { Cost }
\end{array} & \begin{array}{c}
\text { Marginal } \
\text { Cost }
\end{array} \
\hline 0 & \$ 11 & \$ 0 & - \
\hline 1 & 11 & 3 & \$ 3 \
\hline 2 & 11 & 8 & 5 \
\hline 3 & 11 & 14 & 6 \
\hline 4 & 11 & 23 & 9 \
\hline 5 & 11 & 36 & 13 \
\hline
\end{array}$

Accepted Answer

A)  $8.50 
B)  $9 
C)  $34 
D)  $2.75 
A)  $8.50 
B)  $9 
C)  $34 
D)  $2.75 A

Question 4

Ashley's expenses for her painting business include rent of $2,000, payroll of $3,000, utilities of $1,000, and painting supplies of $500. What are her variable costs?

Accepted Answer

A)  $500 
B)  $1,300 
C)  $1,900 
D)  $3,500 
A)  $500 
B)  $1,300 
C)  $1,900 
D)  $3,500

Question 5

The smallest level of output at which all economies of scale have been fully utilized is:

Accepted Answer

A)  constant returns to scale. 
B)  economies of scale. 
C)  diseconomies of scale. 
D)  minimum efficient scales. 
A)  constant returns to scale. 
B)  economies of scale. 
C)  diseconomies of scale. 
D)  minimum efficient scales.

Question 6

The first part of a typical long-run average total cost (LRATC) curve represents:

Accepted Answer

A)  constant returns to scale. 
B)  economies of scale. 
C)  diseconomies of scale. 
D)  minimum efficient scales. 
A)  constant returns to scale. 
B)  economies of scale. 
C)  diseconomies of scale. 
D)  minimum efficient scales.

Question 7

(Figure: Long-Run and Short-Run Average Total Cost Curves) In the figure, at 2,000 units of output, the firm is experiencing:

Accepted Answer

A)  economies of scale 
B)  constant returns to scale 
C)  minimum efficient scale 
D)  diseconomies of scale 
A)  economies of scale 
B)  constant returns to scale 
C)  minimum efficient scale 
D)  diseconomies of scale

Question 8

Accountants include _____ in calculating accounting profit.

Accepted Answer

A)  only implicit costs 
B)  only explicit costs 
C)  both implicit and explicit costs 
D)  neither implicit nor explicit costs 
A)  only implicit costs 
B)  only explicit costs 
C)  both implicit and explicit costs 
D)  neither implicit nor explicit costs

Question 9

The _____ function indicates the amount of output that can be produced with various levels of inputs, given the current technology.

Accepted Answer

A)  profit 
B)  resource 
C)  production 
D)  technical 
A)  profit 
B)  resource 
C)  production 
D)  technical

Question 10

_____ costs are input costs that involve actual payments of money.

Accepted Answer

A)  Implicit 
B)  Explicit 
C)  Finance 
D)  Economic 
A)  Implicit 
B)  Explicit 
C)  Finance 
D)  Economic

Question 11

(Figure: Cost Schedule) In the figure, the average fixed cost to produce two units is:
 $\begin{array}{|c|c|c|c|}
\hline \text { Quantity } & \text { Fixed Cost } & \begin{array}{c}
\text { Variable } \
\text { Cost }
\end{array} & \begin{array}{c}
\text { Marginal } \
\text { Cost }
\end{array} \
\hline 0 & \$ 11 & \$ 0 & - \
\hline 1 & 11 & 3 & \$ 3 \
\hline 2 & 11 & 8 & 5 \
\hline 3 & 11 & 14 & 6 \
\hline 4 & 11 & 23 & 9 \
\hline 5 & 11 & 36 & 13 \
\hline
\end{array}$

Accepted Answer

A)  $11. 
B)  $9.50. 
C)  $3.67. 
D)  $5.50 
A)  $11. 
B)  $9.50. 
C)  $3.67. 
D)  $5.50

Question 12

An economic loss is a _____ profit.

Accepted Answer

A)  negative explicit 
B)  negative economic 
C)  positive implicit 
D)  positive accounting 
A)  negative explicit 
B)  negative economic 
C)  positive implicit 
D)  positive accounting

Question 13

The _____ cost curve is U-shaped.

Accepted Answer

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

Question 14

(Figure: Costs) In the figure, what are total costs at 40 units?

Accepted Answer

A)  $8 
B)  $14 
C)  $320 
D)  $560 
A)  $8 
B)  $14 
C)  $320 
D)  $560

Question 15

(Figure: Long-Run and Short-Run Average Total Cost Curves) In the figure, which average total cost (ATC) would a firm typically choose in order to maximize profit when it is expecting output to remain low?

Accepted Answer

A)  ATC1 
B)  ATC2 
C)  ATC3 
D)  ATC4 
A)  ATC1 
B)  ATC2 
C)  ATC3 
D)  ATC4

Question 16

Wayne, a small business owner, had production expenses last year of $40,000. Revenues were $100,000. Wayne gave up a job that paid $60,000 to open his business. Wayne earned an:

Accepted Answer

A)  accounting profit of $100,000. 
B)  economic profit of $100,000. 
C)  accounting profit of zero. 
D)  economic profit of zero. 
A)  accounting profit of $100,000. 
B)  economic profit of $100,000. 
C)  accounting profit of zero. 
D)  economic profit of zero.

Question 17

Costs that require a monetary payment are known as _____ costs.

Accepted Answer

A)  implicit 
B)  explicit 
C)  finance 
D)  economic 
A)  implicit 
B)  explicit 
C)  finance 
D)  economic

Question 18

If the total cost to paint six houses is $10,000, then the average total cost is:

Accepted Answer

A)  $1,000. 
B)  $1,667. 
C)  $10,000. 
D)  $60,000. 
A)  $1,000. 
B)  $1,667. 
C)  $10,000. 
D)  $60,000.

Question 19

Anthony uses $10,000 from his savings (earning 8% interest) to open his business. After the first year, Anthony incurs a loss of $40,000, which includes the interest that was lost when he withdrew funds from savings. His accounting loss is _____, and his tax expense loss is:

Accepted Answer

A)  $39,200; $40,000. 
B)  $40,000; $50,000. 
C)  $39,200; $39,200. 
D)  $30,000; $40,000. 
A)  $39,200; $40,000. 
B)  $40,000; $50,000. 
C)  $39,200; $39,200. 
D)  $30,000; $40,000.

Question 20

Doreen's expenses for her landscaping business included rent of $1,000, payroll of $3,000, utilities of $600, and gas for the lawnmowers of $500. What are her monthly total costs?

Accepted Answer

A)  $1,600 
B)  $2,100 
C)  $4,600 
D)  $5,100 
A)  $1,600 
B)  $2,100 
C)  $4,600 
D)  $5,100

Exam 11: The Cost of Doing Business

In determining a firm's costs, accountants include _____ costs, and economists include _____ costs.

_____ costs are short-run costs that do not change with the quantity of output.

(Figure: Cost Schedule) In the figure, what is the average total cost to produce 4 units? Quantity Fixed Cost Variable Cost Marginal Cost 0 \ 11 \ 0 - 1 11 3 \ 3 2 11 8 5 3 11 14 6 4 11 23 9 5 11 36 13

Ashley's expenses for her painting business include rent of $2,000, payroll of $3,000, utilities of $1,000, and painting supplies of $500. What are her variable costs?

The smallest level of output at which all economies of scale have been fully utilized is:

The first part of a typical long-run average total cost (LRATC) curve represents:

(Figure: Long-Run and Short-Run Average Total Cost Curves) In the figure, at 2,000 units of output, the firm is experiencing:

Accountants include _____ in calculating accounting profit.

The _____ function indicates the amount of output that can be produced with various levels of inputs, given the current technology.

_____ costs are input costs that involve actual payments of money.

(Figure: Cost Schedule) In the figure, the average fixed cost to produce two units is: Quantity Fixed Cost Variable Cost Marginal Cost 0 \ 11 \ 0 - 1 11 3 \ 3 2 11 8 5 3 11 14 6 4 11 23 9 5 11 36 13

An economic loss is a _____ profit.

The _____ cost curve is U-shaped.

(Figure: Costs) In the figure, what are total costs at 40 units?

(Figure: Long-Run and Short-Run Average Total Cost Curves) In the figure, which average total cost (ATC) would a firm typically choose in order to maximize profit when it is expecting output to remain low?

Wayne, a small business owner, had production expenses last year of $40,000. Revenues were $100,000. Wayne gave up a job that paid $60,000 to open his business. Wayne earned an:

Costs that require a monetary payment are known as _____ costs.

If the total cost to paint six houses is $10,000, then the average total cost is:

Anthony uses $10,000 from his savings (earning 8% interest) to open his business. After the first year, Anthony incurs a loss of $40,000, which includes the interest that was lost when he withdrew funds from savings. His accounting loss is _____, and his tax expense loss is:

Doreen's expenses for her landscaping business included rent of $1,000, payroll of $3,000, utilities of $600, and gas for the lawnmowers of $500. What are her monthly total costs?

The Basics of Economics

Why We Trade

The Supply and Demand Model

Elasticity

Consumer Choice

The Economic Efficiency of Markets

Taxation: An Economic Analysis

Externalities, the Environment, and Public Goods

Organizing a Business

Stocks and Bonds

Perfect Competition

Monopoly and Antitrust Laws

Monopolistic Competition and Price Discrimination

Oligopoly

Behavioral Economics and Strategy

Labor and Other Resources

The Distribution of Income

Information and Health Economics

GDP and the Price Level

Unemployment and the Business Cycle

Long Run Economic Growth

Saving, Investment, and the Federal Budget Deficit

The Monetary System

Money and the Price Level in the Long Run

Aggregate Supply and Aggregate Demand

Monetary Policy and Interest Rates

Fiscal Policy and the Business Cycle

The Aggregate Expenditure Model

Inflation Expectations and Stabilization Policies

International Trade

Foreign Exchange Markets

International Finance

Filters

In determining a firm's costs, accountants include _ costs, and economists include _ costs.