Question 1

Firms have ________ over their ________ costs in the short run.

Accepted Answer

A)  control; fixed 
B)  no control; fixed 
C)  control; overhead 
D)  no control; variable 
A)  control; fixed 
B)  no control; fixed 
C)  control; overhead 
D)  no control; variable

Question 2

For Elliot's dog-walking service, the only variable input is labor. Elliot's labor costs are $300 a day and his service walks 30 dogs per day. To walk 31 dogs per day, his labor costs increase to $305 a day. The marginal cost of walking that 31st dog is

Accepted Answer

A)  $5. 
B)  $9.83. 
C)  $19.52. 
D)  indeterminate from the information given. 
A)  $5. 
B)  $9.83. 
C)  $19.52. 
D)  indeterminate from the information given.

Question 3

Profit-maximizing firms want to maximize the difference between

Accepted Answer

A)  total revenue and marginal cost. 
B)  total revenue and total cost. 
C)  marginal revenue and marginal cost. 
D)  marginal revenue and average cost. 
A)  total revenue and marginal cost. 
B)  total revenue and total cost. 
C)  marginal revenue and marginal cost. 
D)  marginal revenue and average cost.

Question 4

Refer to the information provided in Figure 8.3 below to answer the questions that follow.   Figure 8.3
-Refer to Figure 8.3. The marginal cost of the ninth basketball is

Accepted Answer

A)  less than $2. 
B)  $2. 
C)  $3. 
D)  greater than $3. 
A)  less than $2. 
B)  $2. 
C)  $3. 
D)  greater than $3.

Question 5

Demand for the product of an industry in perfect competition is assumed to be inelastic.

Accepted Answer

A) True 
 B)False

Question 6

The added revenue that a firm takes in when it increases output by one additional unit is ________ revenue.

Accepted Answer

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

Question 7

Refer to the information provided in Table 8.3 below to answer the questions that follow.
Table 8.3 $$\begin{array}{l}
\begin{array} { lllll} 
 \text {Number of Earrings }&TVC&MC&AVC&TFC&TC&AFC&ATC\
\hline0&\
1&20\2&&10&&&&30\3&&&&&110\4&&&20\5&&&&&180
\end{array}
\end{array}$$
-Refer to Table 8.3. What is the total cost of producing zero units of output?

Accepted Answer

A)  $0 
B)  $30 
C)  $60 
D)  indeterminate from the given information 
A)  $0 
B)  $30 
C)  $60 
D)  indeterminate from the given information

Question 8

Refer to the information provided in Figure 8.5 below to answer the questions that follow.   Figure 8.5
-Refer to Figure 8.5. The marginal cost of the third oven is

Accepted Answer

A)  $50. 
B)  $100. 
C)  $150. 
D)  indeterminate from this information. 
A)  $50. 
B)  $100. 
C)  $150. 
D)  indeterminate from this information.

Question 9

The average variable cost of producing ice cream sundaes are minimized when 100 sundaes are produced. The total cost of producing 100 sundaes is $500. If fixed cost of production is $200, what is the marginal cost of producing the 100th sundae?

Accepted Answer

A)  $2 
B)  $3 
C)  $5 
D)  indeterminate from the given information 
A)  $2 
B)  $3 
C)  $5 
D)  indeterminate from the given information

Question 10

Refer to the information provided in Figure 8.4 below to answer the questions that follow.   Figure 8.4
-Refer to Figure 8.4. Average variable costs are minimized at an output level

Accepted Answer

A)  of 2. 
B)  of 3. 
C)  of 6. 
D)  that is indeterminate from this information. 
A)  of 2. 
B)  of 3. 
C)  of 6. 
D)  that is indeterminate from this information.

Question 11

If a firm's total costs are $100 when 10 units of output are produced and $103 when 11 units of output are produced, the marginal cost of the 11th unit is

Accepted Answer

A)  $1. 
B)  $3. 
C)  $5. 
D)  $9.36. 
A)  $1. 
B)  $3. 
C)  $5. 
D)  $9.36.

Question 12

Dana spends $10,000 on remodeling a storefront that she then opens as a shoe store. The business has not been very successful, and she needs an additional $3,000 to keep the shoe store open. Which of the following is true?

Accepted Answer

A)  The $10,000 Dana spent on remodeling represents a part of the total variable cost of her business. 
B)  The $3,000 represents her marginal costs of production. 
C)  The $10,000 Dana spent on remodeling is a fixed cost of her business. 
D)  The $3,000 Dana needs to keep the deli open represents her total fixed costs. 
A)  The $10,000 Dana spent on remodeling represents a part of the total variable cost of her business. 
B)  The $3,000 represents her marginal costs of production. 
C)  The $10,000 Dana spent on remodeling is a fixed cost of her business. 
D)  The $3,000 Dana needs to keep the deli open represents her total fixed costs.

Question 13

Refer to the information provided in Figure 8.8 below to answer the questions that follow.   Figure 8.8
-Refer to Figure 8.8. At the market price of $8 per bushel, if this farmer produces the profit maximizing level of soybeans, the total revenue would be

Accepted Answer

A)  $1,200. 
B)  $2,800. 
C)  $5,600. 
D)  $8,400. 
A)  $1,200. 
B)  $2,800. 
C)  $5,600. 
D)  $8,400.

Question 14

The relationship between the price that a perfectly competitive firm can charge buyers and the firm's marginal revenue is that the price is ________ marginal revenue over all output.

Accepted Answer

A)  above 
B)  below 
C)  equal to 
D)  sometimes above and sometimes below 
A)  above 
B)  below 
C)  equal to 
D)  sometimes above and sometimes below

Question 15

The marginal cost curve intersects the average variable cost curve at the ________ value of the average variable cost curve.

Accepted Answer

A)  maximum 
B)  minimum 
C)  zero 
D)  average 
A)  maximum 
B)  minimum 
C)  zero 
D)  average

Question 16

Economists usually assume that labor is ________ input in the ________ run.

Accepted Answer

A)  a fixed; short 
B)  a fixed; long 
C)  a variable; short 
D)  part fixed and part variable; long 
A)  a fixed; short 
B)  a fixed; long 
C)  a variable; short 
D)  part fixed and part variable; long

Question 17

Refer to the information provided in Figure 8.8 below to answer the questions that follow.   Figure 8.8
-Refer to Figure 8.8. This farmer's profit-maximizing level of output is ________ units of output.

Accepted Answer

A)  200 
B)  700 
C)  1,000 
D)  1,400 
A)  200 
B)  700 
C)  1,000 
D)  1,400

Question 18

Refer to the information provided in Table 8.2 below to answer the questions that follow.
Table 8.2 $\begin{array} { c} 
Number of\
Earrings& TVC& MC &AVC& TFC& TC &AFC &ATC\
0 & & & & &100 & \ 1 & & 50 & & & \ 2 & && & & && 95 \ 3 & & & 46.67 & & \ 4 & & & & &300 & \ 5 & 270& & & & & \end{array}$
-Refer to Table 8.2. If Sherry produces one pair of earrings, her total variable costs are

Accepted Answer

A)  $50. 
B)  $100. 
C)  $150. 
D)  indeterminate from this information. 
A)  $50. 
B)  $100. 
C)  $150. 
D)  indeterminate from this information.

Question 19

The marginal revenue curve for a perfectly competitive firm will be downward sloping.

Accepted Answer

A) True 
 B)False

Question 20

Which statement is NOT true? Variable costs

Accepted Answer

A)  are equal to total costs in the long run. 
B)  are zero if output is zero. 
C)  are equal to the difference between total cost and total fixed cost. 
D)  remain constant as output goes up. 
A)  are equal to total costs in the long run. 
B)  are zero if output is zero. 
C)  are equal to the difference between total cost and total fixed cost. 
D)  remain constant as output goes up.

Exam 8: Short-Run Costs and Output Decisions

Firms have ________ over their ________ costs in the short run.

For Elliot's dog-walking service, the only variable input is labor. Elliot's labor costs are $300 a day and his service walks 30 dogs per day. To walk 31 dogs per day, his labor costs increase to $305 a day. The marginal cost of walking that 31st dog is

Profit-maximizing firms want to maximize the difference between

Refer to the information provided in Figure 8.3 below to answer the questions that follow. Figure 8.3 -Refer to Figure 8.3. The marginal cost of the ninth basketball is

Demand for the product of an industry in perfect competition is assumed to be inelastic.

The added revenue that a firm takes in when it increases output by one additional unit is ________ revenue.

Refer to the information provided in Table 8.3 below to answer the questions that follow. Table 8.3 Number of Earrings TVC MC AVC TFC TC AFC ATC 0 1 20 2 10 30 3 110 4 20 5 180 -Refer to Table 8.3. What is the total cost of producing zero units of output?

Refer to the information provided in Figure 8.5 below to answer the questions that follow. Figure 8.5 -Refer to Figure 8.5. The marginal cost of the third oven is

The average variable cost of producing ice cream sundaes are minimized when 100 sundaes are produced. The total cost of producing 100 sundaes is $500. If fixed cost of production is $200, what is the marginal cost of producing the 100th sundae?

Refer to the information provided in Figure 8.4 below to answer the questions that follow. Figure 8.4 -Refer to Figure 8.4. Average variable costs are minimized at an output level

If a firm's total costs are $100 when 10 units of output are produced and $103 when 11 units of output are produced, the marginal cost of the 11th unit is

Dana spends $10,000 on remodeling a storefront that she then opens as a shoe store. The business has not been very successful, and she needs an additional $3,000 to keep the shoe store open. Which of the following is true?

Refer to the information provided in Figure 8.8 below to answer the questions that follow. Figure 8.8 -Refer to Figure 8.8. At the market price of $8 per bushel, if this farmer produces the profit maximizing level of soybeans, the total revenue would be

The relationship between the price that a perfectly competitive firm can charge buyers and the firm's marginal revenue is that the price is ________ marginal revenue over all output.

The marginal cost curve intersects the average variable cost curve at the ________ value of the average variable cost curve.

Economists usually assume that labor is ________ input in the ________ run.

Refer to the information provided in Figure 8.8 below to answer the questions that follow. Figure 8.8 -Refer to Figure 8.8. This farmer's profit-maximizing level of output is ________ units of output.

Refer to the information provided in Table 8.2 below to answer the questions that follow. Table 8.2 Numberof Earrings TVC MC AVC TFC TC AFC ATC 0 100 1 50 2 95 3 46.67 4 300 5 270 -Refer to Table 8.2. If Sherry produces one pair of earrings, her total variable costs are

The marginal revenue curve for a perfectly competitive firm will be downward sloping.

Which statement is NOT true? Variable costs

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Elasticity

Household Behavior and Consumer Choice

The Production Process: the Behavior of Profit-Maximizing Firms

Long-Run Costs and Output Decisions

Input Demand: the Labor and Land Markets

Input Demand: the Capital Market and the Investment Decision

General Equilibrium and the Efficiency of Perfect Competition

Monopoly and Antitrust Policy

Oligopoly

Monopolistic Competition

Externalities, Public Goods, and Social Choice

Uncertainty and Asymmetric Information

Income Distribution and Poverty

Public Finance: The Economics of Taxation

International Trade, Comparative Advantage, and Protectionism

Economic Growth in Developing and Transitional Economies

Filters

Firms have over their costs in the short run.

Economists usually assume that labor is input in the run.