Question 1

When a firm is making a profit-maximizing production decision,which of the following principles of economics is likely to be most important to the firm's decision

Accepted Answer

A) The cost of something is what you give up to get it. 
B) A country's standard of living depends on its ability to produce goods and services. 
C) Prices rise when the government prints too much money. 
D) Governments can sometimes improve market outcomes. 
A) The cost of something is what you give up to get it. 
B) A country's standard of living depends on its ability to produce goods and services. 
C) Prices rise when the government prints too much money. 
D) Governments can sometimes improve market outcomes. A

Question 2

Suppose Jan is starting up a small lemonade stand business at the local farmer's market.What would be included in variable costs for Jan's lemonade stand

Accepted Answer

A) the cost of building the lemonade stand 
B) the cost of hiring an artist to design a logo for her sign 
C) the cost of lemons 
D) the monthly fee for renting space at the market 
A) the cost of building the lemonade stand 
B) the cost of hiring an artist to design a logo for her sign 
C) the cost of lemons 
D) the monthly fee for renting space at the market C

Question 3

If a firm produces nothing,which of the following costs will be zero

Accepted Answer

A) total cost 
B) fixed cost 
C) opportunity cost 
D) variable cost 
A) total cost 
B) fixed cost 
C) opportunity cost 
D) variable cost D

Question 4

Economists and accountants usually disagree on the inclusion of implicit costs into the cost analysis of a firm.

Accepted Answer

A) True 
 B)False

Question 5

Scenario 13-5
A stationery firm produces and sells staplers.Last year, it produced 5000 staplers and sold each stapler for $10.In producing the 5000 staplers, it incurred variable costs of $25,000 and a total cost of $45,000.
-Refer to Scenario 13-5.What was the firm's economic profit for the year

Accepted Answer

A) -$35,000 
B) -$5000 
C) $5000 
D) $10,000 
A) -$35,000 
B) -$5000 
C) $5000 
D) $10,000

Question 6

What is the cost of producing an additional unit of output

Accepted Answer

A) the firm's marginal cost 
B) the firm's marginal product 
C) the firm's variable cost 
D) the firm's average variable cost 
A) the firm's marginal cost 
B) the firm's marginal product 
C) the firm's variable cost 
D) the firm's average variable cost

Question 7

Fixed costs are incurred even when a firm does not produce anything.

Accepted Answer

A) True 
 B)False

Question 8

Table 13-3  
-Refer to Table 13-3.What is the average variable cost for the month if six 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 9

Fixed costs are those costs that remain fixed no matter how long the time horizon is.

Accepted Answer

A) True 
 B)False

Question 10

Figure 13-1
The figure depicts a production function for a firm that produces cookies.
  
-Refer to Figure 13-1.As the number of workers increases,what happens to the firm's production

Accepted Answer

A) total output increases, but at a decreasing rate 
B) marginal product increases, but at a decreasing rate 
C) marginal product increases at an increasing rate 
D) total output increases, at an increasing rate 
A) total output increases, but at a decreasing rate 
B) marginal product increases, but at a decreasing rate 
C) marginal product increases at an increasing rate 
D) total output increases, at an increasing rate

Question 11

What is the equation for accounting profit

Accepted Answer

A) Total revenue - Total costs 
B) Economic profit + Implicit costs 
C) Total revenue - (Implicit costs + Total revenue) - Opportunity costs 
D) Accounting revenue - Opportunity costs 
A) Total revenue - Total costs 
B) Economic profit + Implicit costs 
C) Total revenue - (Implicit costs + Total revenue) - Opportunity costs 
D) Accounting revenue - Opportunity costs

Question 12

What does marginal cost tell us

Accepted Answer

A) the value of all resources used in a production process 
B) the additional profit earned when output is increased by one unit 
C) the amount by which total cost rises when output is increased by one unit 
D) the amount by which output rises when labour is increased by one unit 
A) the value of all resources used in a production process 
B) the additional profit earned when output is increased by one unit 
C) the amount by which total cost rises when output is increased by one unit 
D) the amount by which output rises when labour is increased by one unit

Question 13

When does specialization among workers occur

Accepted Answer

A) when each work is allowed to switch from one task to another 
B) when each worker is allowed to perfect one particular task 
C) when each worker is responsible for a number of different tasks 
D) when each worker is trained to be mobile 
A) when each work is allowed to switch from one task to another 
B) when each worker is allowed to perfect one particular task 
C) when each worker is responsible for a number of different tasks 
D) when each worker is trained to be mobile

Question 14

Table 13-2  
-Refer to Table 13-2.During the week of July 1,Adrianne doesn't box any chocolates.What are her costs during the week

Accepted Answer

A) $0 
B) $250 
C) $275 
D) $425 
A) $0 
B) $250 
C) $275 
D) $425

Question 15

Which assumption is often realistic for a firm in the short run

Accepted Answer

A) The firm can vary both the size of its factory and the number of workers it employs. 
B) The firm can vary the size of its factory, but not the number of workers it employs. 
C) The firm can vary the number of workers it employs, but not the size of its factory. 
D) The firm can vary neither the size of its factory nor the number of workers it employs. 
A) The firm can vary both the size of its factory and the number of workers it employs. 
B) The firm can vary the size of its factory, but not the number of workers it employs. 
C) The firm can vary the number of workers it employs, but not the size of its factory. 
D) The firm can vary neither the size of its factory nor the number of workers it employs.

Question 16

Table 13-2  
-Refer to Table 13-2.Adrianne has received an order for 3000 boxes of chocolates for next week.Suppose she expects that the trend in the marginal product (MP) of labour will continue in the same direction.What is most likely her best decision

Accepted Answer

A) not commit to meeting the order until she can move to a larger room and hire more workers to box the chocolates 
B) close her business until she is able to hire more productive workers 
C) hire about 12 new workers and hope she can satisfy the order 
D) commit to meeting the order and then take three weeks to complete the job 
A) not commit to meeting the order until she can move to a larger room and hire more workers to box the chocolates 
B) close her business until she is able to hire more productive workers 
C) hire about 12 new workers and hope she can satisfy the order 
D) commit to meeting the order and then take three weeks to complete the job

Question 17

XYZ Corporation produced 300 units of output but sold only 255 of the units it produced.The average cost of production for each unit of output produced was $100.Each of the 255 units sold was sold for a price of $100.What would total revenue for XYZ Corporation be

Accepted Answer

A) -$2700 
B) $2700 
C) $21,125 
D) $25,500 
A) -$2700 
B) $2700 
C) $21,125 
D) $25,500

Question 18

Figure 13-2
The figure depicts a total cost function for a firm that produces cookies.
  
-Refer to Figure 13-2.What does the changing slope of the total-cost curve reflect

Accepted Answer

A) decreasing average variable cost 
B) decreasing average total cost 
C) decreasing marginal product 
D) decreasing marginal cost 
A) decreasing average variable cost 
B) decreasing average total cost 
C) decreasing marginal product 
D) decreasing marginal cost

Question 19

What is accounting profit equal to

Accepted Answer

A) marginal revenue minus marginal cost 
B) total revenue minus the explicit cost of producing goods and services 
C) total revenue minus the opportunity cost of producing goods and services 
D) average revenue minus the average cost of producing the last unit of a good or service 
A) marginal revenue minus marginal cost 
B) total revenue minus the explicit cost of producing goods and services 
C) total revenue minus the opportunity cost of producing goods and services 
D) average revenue minus the average cost of producing the last unit of a good or service

Question 20

Marginal cost increases as the quantity of output increases.What property does this reflect

Accepted Answer

A) increasing total cost 
B) diminishing total cost 
C) increasing marginal product 
D) diminishing marginal product 
A) increasing total cost 
B) diminishing total cost 
C) increasing marginal product 
D) diminishing marginal product

Exam 13: The Costs of Production

When a firm is making a profit-maximizing production decision,which of the following principles of economics is likely to be most important to the firm's decision

Suppose Jan is starting up a small lemonade stand business at the local farmer's market.What would be included in variable costs for Jan's lemonade stand

If a firm produces nothing,which of the following costs will be zero

Economists and accountants usually disagree on the inclusion of implicit costs into the cost analysis of a firm.

Scenario 13-5 A stationery firm produces and sells staplers.Last year, it produced 5000 staplers and sold each stapler for $10.In producing the 5000 staplers, it incurred variable costs of $25,000 and a total cost of $45,000. -Refer to Scenario 13-5.What was the firm's economic profit for the year

What is the cost of producing an additional unit of output

Fixed costs are incurred even when a firm does not produce anything.

Table 13-3 -Refer to Table 13-3.What is the average variable cost for the month if six instructional modules are produced

Fixed costs are those costs that remain fixed no matter how long the time horizon is.

Figure 13-1 The figure depicts a production function for a firm that produces cookies. -Refer to Figure 13-1.As the number of workers increases,what happens to the firm's production

What is the equation for accounting profit

What does marginal cost tell us

When does specialization among workers occur

Table 13-2 -Refer to Table 13-2.During the week of July 1,Adrianne doesn't box any chocolates.What are her costs during the week

Which assumption is often realistic for a firm in the short run

Table 13-2 -Refer to Table 13-2.Adrianne has received an order for 3000 boxes of chocolates for next week.Suppose she expects that the trend in the marginal product (MP) of labour will continue in the same direction.What is most likely her best decision

XYZ Corporation produced 300 units of output but sold only 255 of the units it produced.The average cost of production for each unit of output produced was $100.Each of the 255 units sold was sold for a price of $100.What would total revenue for XYZ Corporation be

Figure 13-2 The figure depicts a total cost function for a firm that produces cookies. -Refer to Figure 13-2.What does the changing slope of the total-cost curve reflect

What is accounting profit equal to

Marginal cost increases as the quantity of output increases.What property does this reflect

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

Application: 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 of Microeconomics

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