Question 1

The short-run average variable cost curve _____

Accepted Answer

A) is always downward sloping. 
B) starts at the origin and always slopes upward. 
C) starts above the origin and always slopes upward. 
D) is a horizontal line intersecting the vertical axis. 
E) slopes downward at low rates of output and then slopes upward at higher rates of output. 
A) is always downward sloping. 
B) starts at the origin and always slopes upward. 
C) starts above the origin and always slopes upward. 
D) is a horizontal line intersecting the vertical axis. 
E) slopes downward at low rates of output and then slopes upward at higher rates of output.

Question 2

In the long run,all of a firm's inputs are variable.

Accepted Answer

A) True 
 B)False

Question 3

Total product is defined as _____

Accepted Answer

A) a firm's total output. 
B) the increase in output that occurs when all resources are increased by the same proportion. 
C) the increase in output that occurs when an additional unit of a resource is added, holding all other resources constant. 
D) the amount of additional resources needed to increase output by one unit when all resources are increased by the same amount. 
E) the amount of additional money needed to increase output by one unit when all resources are held constant. 
A) a firm's total output. 
B) the increase in output that occurs when all resources are increased by the same proportion. 
C) the increase in output that occurs when an additional unit of a resource is added, holding all other resources constant. 
D) the amount of additional resources needed to increase output by one unit when all resources are increased by the same amount. 
E) the amount of additional money needed to increase output by one unit when all resources are held constant.

Question 4

A firm produces 5000 waterproof cellphone cases,which they sell for $30 each.They have $35,000 in fixed costs and $85,000 in total costs every year.What is the average total cost?

Accepted Answer

A) $7 
B) $10 
C) $17 
D) $24 
E) $27 
A) $7 
B) $10 
C) $17 
D) $24 
E) $27

Question 5

The minimum efficient scale for a firm is the _____

Accepted Answer

A) lowest rate of output at which long-run average cost is at a minimum. 
B) lowest rate of output at which short-run average total cost is at a minimum. 
C) lowest rate of output at which short-run average variable cost is at a minimum. 
D) average of the rates of output at which long-run average cost is at a minimum. 
E) average of the rates of output at which short-run average total cost is at a minimum. 
A) lowest rate of output at which long-run average cost is at a minimum. 
B) lowest rate of output at which short-run average total cost is at a minimum. 
C) lowest rate of output at which short-run average variable cost is at a minimum. 
D) average of the rates of output at which long-run average cost is at a minimum. 
E) average of the rates of output at which short-run average total cost is at a minimum.

Question 6

Table 7.6
 $$\begin{array} { | c | c | c | c | } 
\hline \text { Cakes } & \text { Variable Costs } & \text { Fixed Costs } & \text { Total Costs } \
\hline 0 & & \$ 10 & \
\hline 1 & \$ 2 & & \
\hline 2 & \$ 3 & & \
\hline 3 & & & \$ 16 \
\hline 4 & \$ 9 & & \
\hline 5 & \$ 10 & & \$ 20 \
\hline
\end{array}$$
-Refer to Table 7.6,which shows the costs of birthday cakes at a bakery.What is the variable cost of 3 cakes?

Accepted Answer

A) $2 
B) $2.5 
C) $6 
D) $1.50 
E) $13 
A) $2 
B) $2.5 
C) $6 
D) $1.50 
E) $13

Question 7

Exhibit 7.4
  
-Refer to Exhibit 7.4,which shows short-run average cost curves.Average cost is lowest for a medium plant when output is _____

Accepted Answer

A) at q. 
B) less than qa. 
C) between qa and qb. 
D) more than qb. 
E) more than q'. 
A) at q. 
B) less than qa. 
C) between qa and qb. 
D) more than qb. 
E) more than q'.

Question 8

If a firm experiencing "economies of scale" decreases its output,its long-run average cost will decrease.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following correctly describes the relationship between the marginal cost and average variable cost curves?

Accepted Answer

A) The marginal cost curve is always above the average variable cost curve. 
B) The average variable cost curve is always above the marginal cost curve. 
C) The marginal cost curve crosses the average variable cost curve at the average variable cost curves' minimum point. 
D) The marginal cost curve crosses the average variable cost curve at the marginal cost curves' minimum point. 
E) Both the average variable cost curve and the marginal cost curve first rise and then fall. 
A) The marginal cost curve is always above the average variable cost curve. 
B) The average variable cost curve is always above the marginal cost curve. 
C) The marginal cost curve crosses the average variable cost curve at the average variable cost curves' minimum point. 
D) The marginal cost curve crosses the average variable cost curve at the marginal cost curves' minimum point. 
E) Both the average variable cost curve and the marginal cost curve first rise and then fall.

Question 10

The production function is defined as _____

Accepted Answer

A) a firm's total output. 
B) the increase in output that occurs when all resources are increased by the same proportion. 
C) the increase in output that occurs when an additional unit of a resource is added, holding all other resources constant. 
D) the amount of additional resources needed to increase output by one unit when all resources are increased by the same amount. 
E) The relationship between the amount of resources employed and total product. 
A) a firm's total output. 
B) the increase in output that occurs when all resources are increased by the same proportion. 
C) the increase in output that occurs when an additional unit of a resource is added, holding all other resources constant. 
D) the amount of additional resources needed to increase output by one unit when all resources are increased by the same amount. 
E) The relationship between the amount of resources employed and total product.

Question 11

Table 7.2
 $$\begin{array} { c c } 
\text { Labor } & \begin{array} { c } 
\text { Total Froduct } \
\text { (pairs of shoes) }
\end{array} \
\hline 0 & 0 \
1 & 20 \
2 & 50 \
3 & 75 \
4 & 80 \
5 & 75
\end{array}$$
-Refer to Table 7.2,which shows labor and the quantity of shoes produced by a firm.What is the marginal product of the fourth unit of labor?

Accepted Answer

A) 5 pairs of shoes 
B) 10 pairs of shoes 
C) 20 pairs of shoes 
D) 50 pairs of shoes 
E) 80 pairs of shoes 
A) 5 pairs of shoes 
B) 10 pairs of shoes 
C) 20 pairs of shoes 
D) 50 pairs of shoes 
E) 80 pairs of shoes

Question 12

Suppose a professor gives up her teaching job to devote her time to writing textbooks.Soon after,salaries for professors rise.As a result,_____

Accepted Answer

A) her accounting profit will rise. 
B) her accounting profit will fall. 
C) her explicit costs will rise. 
D) her economic profit from textbooks will fall. 
E) her economic profit from textbooks will rise. 
A) her accounting profit will rise. 
B) her accounting profit will fall. 
C) her explicit costs will rise. 
D) her economic profit from textbooks will fall. 
E) her economic profit from textbooks will rise.

Question 13

The short run is a period of time _____

Accepted Answer

A) equal to or less than six months. 
B) during which all resources may be varied. 
C) during which all resources are fixed. 
D) during which at least one resource is fixed. 
E) during which at least one resource may be varied. 
A) equal to or less than six months. 
B) during which all resources may be varied. 
C) during which all resources are fixed. 
D) during which at least one resource is fixed. 
E) during which at least one resource may be varied.

Question 14

Table 7.5
​
 $$\begin{array} { | c | c | c | } 
\hline \text { Labor } & \text { Total Froduct } & \text { Marginal Product } \
\hline 1 & 2 & 2 \
\hline 2 & 6 & \mathrm {~A} \
\hline 3 & \mathrm {~B} & 6 \
\hline 4 & 16 & 4 \
\hline 5 & 18 & \mathrm { C } \
\hline 6 & \mathrm { D } & 0 \
\hline
\end{array}$$
-Refer to Table 7.5,which shows labor,total product,and marginal product produced by a firm.What is the total product at Point D?

Accepted Answer

A) 4 
B) 2 
C) 12 
D) 18 
E) 24 
A) 4 
B) 2 
C) 12 
D) 18 
E) 24

Question 15

Table 7.5
​
 $$\begin{array} { | c | c | c | } 
\hline \text { Labor } & \text { Total Froduct } & \text { Marginal Product } \
\hline 1 & 2 & 2 \
\hline 2 & 6 & \mathrm {~A} \
\hline 3 & \mathrm {~B} & 6 \
\hline 4 & 16 & 4 \
\hline 5 & 18 & \mathrm { C } \
\hline 6 & \mathrm { D } & 0 \
\hline
\end{array}$$
-Refer to Table 7.5,which shows labor,total product,and marginal product produced by a firm.At which points do negative marginal returns set in?

Accepted Answer

A) before the first unit of labor 
B) between the first and second units of labor 
C) between the second and third units of labor 
D) between the third and fourth units of labor 
E) after the sixth unit of labor 
A) before the first unit of labor 
B) between the first and second units of labor 
C) between the second and third units of labor 
D) between the third and fourth units of labor 
E) after the sixth unit of labor

Question 16

The law of diminishing marginal returns explains why _____

Accepted Answer

A) monopolies have a guaranteed profit margin. 
B) short-run marginal cost and average cost curves are U-shaped. 
C) the production possibilities curve is bowed out. 
D) long-run supply curves are downward sloping. 
E) the total product curve is a straight line. 
A) monopolies have a guaranteed profit margin. 
B) short-run marginal cost and average cost curves are U-shaped. 
C) the production possibilities curve is bowed out. 
D) long-run supply curves are downward sloping. 
E) the total product curve is a straight line.

Question 17

Table 7.6
 $$\begin{array} { | c | c | c | c | } 
\hline \text { Cakes } & \text { Variable Costs } & \text { Fixed Costs } & \text { Total Costs } \
\hline 0 & & \$ 10 & \
\hline 1 & \$ 2 & & \
\hline 2 & \$ 3 & & \
\hline 3 & & & \$ 16 \
\hline 4 & \$ 9 & & \
\hline 5 & \$ 10 & & \$ 20 \
\hline
\end{array}$$
-Refer to Table 7.6,which shows the costs of birthday cakes at a bakery.What is the average variable cost of 2 cakes?

Accepted Answer

A) $2 
B) $2.5 
C) $6 
D) $1.50 
E) $13 
A) $2 
B) $2.5 
C) $6 
D) $1.50 
E) $13

Question 18

Table 7.1
​
 $$\begin{array} { l r } 
\text { Total Revenue } & \$ 100,000 \
\hline \text { Assistant's sal ary } & \$ 20,000 \
\text { Material \& equipment } & \$ 15,000 \
\text { Forgone salary } & \$ 30,000 \
\text { Forgone interest } & \$ 1,000 \
\text { Forgone building rental } & \$ 10,000
\end{array}$$
-Refer to Table 7.1,which shows revenue and cost information for Sally's small business.Sally owns a small business that she operates in a building she owns.Given the information in the table below,Sally's economic profit is equal to _____

Accepted Answer

A) $80,000. 
B) $50,000. 
C) $65,000. 
D) $35,000. 
E) $24,000. 
A) $80,000. 
B) $50,000. 
C) $65,000. 
D) $35,000. 
E) $24,000.

Question 19

Accounting profit is _____

Accepted Answer

A) always less than economic profit. 
B) never less than economic profit. 
C) equal to economic profit if a normal profit is earned. 
D) less than economic profit only when implicit costs are greater than explicit costs. 
E) greater than economic profit only when implicit costs are greater than explicit costs. 
A) always less than economic profit. 
B) never less than economic profit. 
C) equal to economic profit if a normal profit is earned. 
D) less than economic profit only when implicit costs are greater than explicit costs. 
E) greater than economic profit only when implicit costs are greater than explicit costs.

Question 20

Suppose Joan uses her savings to purchase computer equipment for her new consulting business.Soon after this,the market interest rate rises.As a result,her _____

Accepted Answer

A) explicit costs rise immediately. 
B) accounting profit falls immediately. 
C) accounting profit rises immediately. 
D) economic profit rises immediately. 
E) economic profit falls immediately. 
A) explicit costs rise immediately. 
B) accounting profit falls immediately. 
C) accounting profit rises immediately. 
D) economic profit rises immediately. 
E) economic profit falls immediately.

The short-run average variable cost curve _____

In the long run,all of a firm's inputs are variable.

Total product is defined as _____

A firm produces 5000 waterproof cellphone cases,which they sell for $30 each.They have $35,000 in fixed costs and $85,000 in total costs every year.What is the average total cost?

The minimum efficient scale for a firm is the _____

Table 7.6 Cakes Variable Costs Fixed Costs Total Costs 0 \ 10 1 \ 2 2 \ 3 3 \ 16 4 \ 9 5 \ 10 \ 20 -Refer to Table 7.6,which shows the costs of birthday cakes at a bakery.What is the variable cost of 3 cakes?

Exhibit 7.4 -Refer to Exhibit 7.4,which shows short-run average cost curves.Average cost is lowest for a medium plant when output is _____

If a firm experiencing "economies of scale" decreases its output,its long-run average cost will decrease.

Which of the following correctly describes the relationship between the marginal cost and average variable cost curves?

The production function is defined as _____

Table 7.2 Labor Total Froduct (pairs of shoes) 0 0 1 20 2 50 3 75 4 80 5 75 -Refer to Table 7.2,which shows labor and the quantity of shoes produced by a firm.What is the marginal product of the fourth unit of labor?

Suppose a professor gives up her teaching job to devote her time to writing textbooks.Soon after,salaries for professors rise.As a result,_____

The short run is a period of time _____

Table 7.5 Labor Total Froduct Marginal Product 1 2 2 2 6 3 6 4 16 4 5 18 6 0 -Refer to Table 7.5,which shows labor,total product,and marginal product produced by a firm.What is the total product at Point D?

Table 7.5 Labor Total Froduct Marginal Product 1 2 2 2 6 3 6 4 16 4 5 18 6 0 -Refer to Table 7.5,which shows labor,total product,and marginal product produced by a firm.At which points do negative marginal returns set in?

The law of diminishing marginal returns explains why _____

Table 7.6 Cakes Variable Costs Fixed Costs Total Costs 0 \ 10 1 \ 2 2 \ 3 3 \ 16 4 \ 9 5 \ 10 \ 20 -Refer to Table 7.6,which shows the costs of birthday cakes at a bakery.What is the average variable cost of 2 cakes?

Accounting profit is _____

Suppose Joan uses her savings to purchase computer equipment for her new consulting business.Soon after this,the market interest rate rises.As a result,her _____

The Art and Science of Economic Analysis

Economic Tools and Economic Systems

Economic Decision Makers

Demand, supply, and Markets

Elasticity of Demand and Supply

Consumer Choice and Demand

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital, interest, entrepreneurship, and Corporate Finance

Transaction Costs, asymmetric Information, and Behavioral Economics

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

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Exam 7: Production and Cost in the Firm

The short-run average variable cost curve _____

In the long run,all of a firm's inputs are variable.

Total product is defined as _____

A firm produces 5000 waterproof cellphone cases,which they sell for $30 each.They have $35,000 in fixed costs and $85,000 in total costs every year.What is the average total cost?

The minimum efficient scale for a firm is the _____

Table 7.6 Cakes Variable Costs Fixed Costs Total Costs 0 \ 10 1 \ 2 2 \ 3 3 \ 16 4 \ 9 5 \ 10 \ 20 -Refer to Table 7.6,which shows the costs of birthday cakes at a bakery.What is the variable cost of 3 cakes?

Exhibit 7.4 -Refer to Exhibit 7.4,which shows short-run average cost curves.Average cost is lowest for a medium plant when output is _____

If a firm experiencing "economies of scale" decreases its output,its long-run average cost will decrease.

Which of the following correctly describes the relationship between the marginal cost and average variable cost curves?

The production function is defined as _____

Table 7.2 Labor Total Froduct (pairs of shoes) 0 0 1 20 2 50 3 75 4 80 5 75 -Refer to Table 7.2,which shows labor and the quantity of shoes produced by a firm.What is the marginal product of the fourth unit of labor?

Suppose a professor gives up her teaching job to devote her time to writing textbooks.Soon after,salaries for professors rise.As a result,_____

The short run is a period of time _____

Table 7.5 ​ Labor Total Froduct Marginal Product 1 2 2 2 6 3 6 4 16 4 5 18 6 0 -Refer to Table 7.5,which shows labor,total product,and marginal product produced by a firm.What is the total product at Point D?

Table 7.5 ​ Labor Total Froduct Marginal Product 1 2 2 2 6 3 6 4 16 4 5 18 6 0 -Refer to Table 7.5,which shows labor,total product,and marginal product produced by a firm.At which points do negative marginal returns set in?

The law of diminishing marginal returns explains why _____

Table 7.6 Cakes Variable Costs Fixed Costs Total Costs 0 \ 10 1 \ 2 2 \ 3 3 \ 16 4 \ 9 5 \ 10 \ 20 -Refer to Table 7.6,which shows the costs of birthday cakes at a bakery.What is the average variable cost of 2 cakes?

Accounting profit is _____

Suppose Joan uses her savings to purchase computer equipment for her new consulting business.Soon after this,the market interest rate rises.As a result,her _____

The Art and Science of Economic Analysis

Economic Tools and Economic Systems

Economic Decision Makers

Demand, supply, and Markets

Elasticity of Demand and Supply

Consumer Choice and Demand

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital, interest, entrepreneurship, and Corporate Finance

Transaction Costs, asymmetric Information, and Behavioral Economics

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Externalities and the Environment

Poverty and Redistribution

International Trade

International Finance

Economic Development

Filters

Table 7.5 Labor Total Froduct Marginal Product 1 2 2 2 6 3 6 4 16 4 5 18 6 0 -Refer to Table 7.5,which shows labor,total product,and marginal product produced by a firm.What is the total product at Point D?

Table 7.5 Labor Total Froduct Marginal Product 1 2 2 2 6 3 6 4 16 4 5 18 6 0 -Refer to Table 7.5,which shows labor,total product,and marginal product produced by a firm.At which points do negative marginal returns set in?