Question 1

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. D

Question 2

From a firm's viewpoint, opportunity cost is the

Accepted Answer

A) best alternative use customers can find for the firm's output. 
B) cost the firm must pay for the factors of production it employs to attract them from their best alternative use. 
C) accounting cost of resources. 
D) price a firm can charge for its output. 
E) cost of acquiring the opportunity to sell to its customers. 
A) best alternative use customers can find for the firm's output. 
B) cost the firm must pay for the factors of production it employs to attract them from their best alternative use. 
C) accounting cost of resources. 
D) price a firm can charge for its output. 
E) cost of acquiring the opportunity to sell to its customers. B

Question 3

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. C

Question 4

The long-run average cost curve is U-shaped because of which of the following?

Accepted Answer

A) decreasing marginal returns as more labor is hired 
B) constant fixed costs as output is increased 
C) economies and diseconomies of scale 
D) increasing marginal returns as more labor is hired 
E) decreasing average fixed costs as output is increased 
A) decreasing marginal returns as more labor is hired 
B) constant fixed costs as output is increased 
C) economies and diseconomies of scale 
D) increasing marginal returns as more labor is hired 
E) decreasing average fixed costs as output is increased

Question 5

The figure above shows some of a firm's cost curves.
-Based on the figure above, curve C is the firm's

Accepted Answer

A) marginal cost curve. 
B) total cost curve. 
C) average total cost curve. 
D) average variable cost curve. 
E) average fixed cost curve. 
A) marginal cost curve. 
B) total cost curve. 
C) average total cost curve. 
D) average variable cost curve. 
E) average fixed cost curve.

Question 6

Which of the following statements is true?

Accepted Answer

A) In the long run, the average cost curve is always downward sloping. 
B) In the long run, the quantities of all inputs are fixed. 
C) In the long run, the firms' fixed costs are greater than its variable costs. 
D) In the long run, all costs are variable costs. 
E) In the long run, the total variable cost equals the total fixed cost. 
A) In the long run, the average cost curve is always downward sloping. 
B) In the long run, the quantities of all inputs are fixed. 
C) In the long run, the firms' fixed costs are greater than its variable costs. 
D) In the long run, all costs are variable costs. 
E) In the long run, the total variable cost equals the total fixed cost.

Question 7

-Anna owns a dog grooming salon in Brunswick, Georgia.The above table has Anna's total product schedule.Anna pays each worker $300 per week and she pays rent of $600 a week for her salon.These are her only costs.When Anna has a staff of 6 workers, her average total cost equals

Accepted Answer

A) $2,400. 
B) $300. 
C) $7.50. 
D) $10.00. 
E) $4,200. 
A) $2,400. 
B) $300. 
C) $7.50. 
D) $10.00. 
E) $4,200.

Question 8

Denise owns a plant that produces watch parts in Ohio.Denise noticed that when she hired the last worker, that worker's marginal product exceeded the marginal product of the previous worker.As a result, when the last worker was hired, Denise's average product of labor

Accepted Answer

A) decreased. 
B) increased. 
C) did not change. 
D) perhaps changed, but there is not enough information to determine whether or not it did change. 
E) equals the marginal product of labor. 
A) decreased. 
B) increased. 
C) did not change. 
D) perhaps changed, but there is not enough information to determine whether or not it did change. 
E) equals the marginal product of labor.

Question 9

If a business owner decided to expand her business but rather than borrowing money from a bank used her own funds, then

Accepted Answer

A) she would be unable to earn a normal profit. 
B) there is no cost associated with the expansion. 
C) she would forego the opportunity to earn interest on the money. 
D) the amount of her funds she used is an explicit cost. 
E) the amount of her funds she used is part of her normal profit. 
A) she would be unable to earn a normal profit. 
B) there is no cost associated with the expansion. 
C) she would forego the opportunity to earn interest on the money. 
D) the amount of her funds she used is an explicit cost. 
E) the amount of her funds she used is part of her normal profit.

Question 10

As output increases, average total cost decreases

Accepted Answer

A) constantly. 
B) as the average product of labor decreases. 
C) initially and then starts to increase. 
D) in the long run and the short run. 
E) as long as average fixed cost decreases. 
A) constantly. 
B) as the average product of labor decreases. 
C) initially and then starts to increase. 
D) in the long run and the short run. 
E) as long as average fixed cost decreases.

Question 11

The main source of economies of scale is

Accepted Answer

A) reductions in the price of factors of production. 
B) greater specialization of both labor and capital. 
C) increasing average costs. 
D) decreasing marginal product. 
E) the ability to hire less labor. 
A) reductions in the price of factors of production. 
B) greater specialization of both labor and capital. 
C) increasing average costs. 
D) decreasing marginal product. 
E) the ability to hire less labor.

Question 12

Economic profit equals total revenue minus total

Accepted Answer

A) explicit costs. 
B) opportunity costs. 
C) implicit costs. 
D) accounting costs. 
E) entrepreneur's costs. 
A) explicit costs. 
B) opportunity costs. 
C) implicit costs. 
D) accounting costs. 
E) entrepreneur's costs.

Question 13

The figure above shows some of a firm's cost curves.
-Based on the figure above, curve A is the firm's

Accepted Answer

A) marginal cost curve. 
B) total cost curve. 
C) average total cost curve. 
D) average variable cost curve. 
E) average fixed cost curve. 
A) marginal cost curve. 
B) total cost curve. 
C) average total cost curve. 
D) average variable cost curve. 
E) average fixed cost curve.

Question 14

When a firm's long-run average total cost falls as its output increases, the firm is experiencing

Accepted Answer

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

Question 15

The vertical distance between total cost curve and total variable cost curve is equal to

Accepted Answer

A) average fixed cost. 
B) total fixed cost. 
C) average variable cost. 
D) average total cost. 
E) marginal cost. 
A) average fixed cost. 
B) total fixed cost. 
C) average variable cost. 
D) average total cost. 
E) marginal cost.

Question 16

The cost that a firm pays in money to hire a resource is referred to as ________ cost.

Accepted Answer

A) a minimized 
B) a maximized 
C) an explicit 
D) an implicit 
E) a total 
A) a minimized 
B) a maximized 
C) an explicit 
D) an implicit 
E) a total

Question 17

April quit her job as an accountant at Ernst and Young, where she was paid $45,000 per year.She started her own landscaping business.She rents machines and tools for $50,000 and pays $10,000 as wages to her help.These are her only costs.April earned total revenue of $100,000.

Accepted Answer

A) Her accountant calculates her profit as $40,000. 
B) She has an economic loss. 
C) Her explicit cost is $105,000. 
D) Both answers A and B are correct. 
E) Both answers A and C are correct. 
A) Her accountant calculates her profit as $40,000. 
B) She has an economic loss. 
C) Her explicit cost is $105,000. 
D) Both answers A and B are correct. 
E) Both answers A and C are correct.

Question 18

Increasing marginal returns occur when the

Accepted Answer

A) average product of an additional worker is less than the average product of the previous worker. 
B) marginal product of an additional worker exceeds the marginal product of the previous worker. 
C) marginal product of labor is less than the average product of labor. 
D) total output of the firm is at its maximum. 
E) total product curve is horizontal. 
A) average product of an additional worker is less than the average product of the previous worker. 
B) marginal product of an additional worker exceeds the marginal product of the previous worker. 
C) marginal product of labor is less than the average product of labor. 
D) total output of the firm is at its maximum. 
E) total product curve is horizontal.

Question 19

-Anna owns a dog grooming salon in Brunswick, Georgia.The above table has Anna's total product schedule.Anna pays each worker $300 per week and she pays rent of $600 a week for her salon.These are her only costs.When Anna has a staff of 6 workers, her total cost equals

Accepted Answer

A) $2,400. 
B) $300. 
C) $7.50. 
D) $10.00. 
E) $1,800. 
A) $2,400. 
B) $300. 
C) $7.50. 
D) $10.00. 
E) $1,800.

Question 20

-The Jerry-Berry Ice Cream Shoppe's total cost schedule is in the above table.Based on the table, the marginal cost of producing the fourth gallon of ice cream is

Accepted Answer

A) $2. 
B) $3. 
C) $5. 
D) $8. 
E) $32. 
A) $2. 
B) $3. 
C) $5. 
D) $8. 
E) $32.

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

From a firm's viewpoint, opportunity cost is the

A normal profit is defined as

The long-run average cost curve is U-shaped because of which of the following?

The figure above shows some of a firm's cost curves. -Based on the figure above, curve C is the firm's

Which of the following statements is true?

-Anna owns a dog grooming salon in Brunswick, Georgia.The above table has Anna's total product schedule.Anna pays each worker $300 per week and she pays rent of $600 a week for her salon.These are her only costs.When Anna has a staff of 6 workers, her average total cost equals

Denise owns a plant that produces watch parts in Ohio.Denise noticed that when she hired the last worker, that worker's marginal product exceeded the marginal product of the previous worker.As a result, when the last worker was hired, Denise's average product of labor

If a business owner decided to expand her business but rather than borrowing money from a bank used her own funds, then

As output increases, average total cost decreases

The main source of economies of scale is

Economic profit equals total revenue minus total

The figure above shows some of a firm's cost curves. -Based on the figure above, curve A is the firm's

When a firm's long-run average total cost falls as its output increases, the firm is experiencing

The vertical distance between total cost curve and total variable cost curve is equal to

The cost that a firm pays in money to hire a resource is referred to as ________ cost.

April quit her job as an accountant at Ernst and Young, where she was paid $45,000 per year.She started her own landscaping business.She rents machines and tools for $50,000 and pays $10,000 as wages to her help.These are her only costs.April earned total revenue of $100,000.

Increasing marginal returns occur when the

-Anna owns a dog grooming salon in Brunswick, Georgia.The above table has Anna's total product schedule.Anna pays each worker $300 per week and she pays rent of $600 a week for her salon.These are her only costs.When Anna has a staff of 6 workers, her total cost equals

-The Jerry-Berry Ice Cream Shoppe's total cost schedule is in the above table.Based on the table, the marginal cost of producing the fourth gallon of ice cream is

Getting Started

The Usand 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

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

From a firm's viewpoint, opportunity cost is the

A normal profit is defined as

The long-run average cost curve is U-shaped because of which of the following?

The figure above shows some of a firm's cost curves. -Based on the figure above, curve C is the firm's

Which of the following statements is true?

-Anna owns a dog grooming salon in Brunswick, Georgia.The above table has Anna's total product schedule.Anna pays each worker $300 per week and she pays rent of $600 a week for her salon.These are her only costs.When Anna has a staff of 6 workers, her average total cost equals

Denise owns a plant that produces watch parts in Ohio.Denise noticed that when she hired the last worker, that worker's marginal product exceeded the marginal product of the previous worker.As a result, when the last worker was hired, Denise's average product of labor

If a business owner decided to expand her business but rather than borrowing money from a bank used her own funds, then

As output increases, average total cost decreases

The main source of economies of scale is

Economic profit equals total revenue minus total

The figure above shows some of a firm's cost curves. -Based on the figure above, curve A is the firm's

When a firm's long-run average total cost falls as its output increases, the firm is experiencing

The vertical distance between total cost curve and total variable cost curve is equal to

The cost that a firm pays in money to hire a resource is referred to as ________ cost.

April quit her job as an accountant at Ernst and Young, where she was paid $45,000 per year.She started her own landscaping business.She rents machines and tools for $50,000 and pays $10,000 as wages to her help.These are her only costs.April earned total revenue of $100,000.

Increasing marginal returns occur when the

-Anna owns a dog grooming salon in Brunswick, Georgia.The above table has Anna's total product schedule.Anna pays each worker $300 per week and she pays rent of $600 a week for her salon.These are her only costs.When Anna has a staff of 6 workers, her total cost equals

-The Jerry-Berry Ice Cream Shoppe's total cost schedule is in the above table.Based on the table, the marginal cost of producing the fourth gallon of ice cream is

Getting Started

The Usand 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