Question 1

Answer the question on the basis of the following output data for a firm. Assume that the amounts of all nonlabor resources are fixed.  Diminishing marginal returns become evident with the addition of the

Accepted Answer

A)  first worker.
B)  fifth worker.
C)  sixth worker.
D)  second worker.E) None of the above
F) B) and D)

Question 2

Refer to the graph. A decrease in fixed costs is shown by

Accepted Answer

A)  a move along short-run average total cost curve ATC₂ from point e to point f.
B)  a move along short-run average total cost curve ATC₁ from point a to point b.
C)  the shift of the short-run average total cost curve from ATC₁ to ATC₂.
D)  the shift of the short-run average total cost curve from ATC₂ to ATC₁.E) B) and C)
F) A) and D)

Question 3

Harvey quit his job at State University, where he earned $58,000 a year. He figures his entrepreneurial talent or forgone entrepreneurial income to be $8,000 a year. To start the business, he cashed in $60,000 in bonds that earned 10 percent interest annually to buy a software company, Extreme Gaming. In the first year, the firm sold 15,000 units of software at $60 for each unit. Of the $60 per unit, $50 goes for the costs of production, packaging, marketing, employee wages and benefits, and rent on a building.The implicit costs of Harvey's firm in the first year were

Accepted Answer

A)  $150,000.
B)  $72,000.
C)  $78,000.
D)  $900,000.E) C) and D)
F) A) and B)

Question 4

The sole proprietor of the Milwaukee Machine Company receives all accounting profits earned by her firm. She has a standing salary offer of $32,000 a year to work for a large corporation. If she had invested her capital outside her own company, she estimates that would have returned $15,000 this year. If accounting profits for the year were $55,000, then her economic profits were (based solely on the given figures)

Accepted Answer

A)  $102,000.
B)  $8,000.
C)  $47,000.
D)  $-23,000.E) A) and C)
F) C) and D)

Question 5

Accounting profits are typically

Accepted Answer

A)  greater than economic profits because the former do not take explicit costs into account.
B)  equal to economic profits because accounting costs include all opportunity costs.
C)  smaller than economic profits because the former do not take implicit costs into account.
D)  greater than economic profits because the former do not take implicit costs into account.E) A) and B)
F) All of the above

Question 6

What is the difference between the short run and the long run?

Accepted Answer

The short run is a period too brief for ...

Question 7

At any level of output.

Accepted Answer

A)  average variable cost will exceed average total cost in the short run.
B)  marginal cost will exceed average variable cost by the level of average fixed cost.
C)  average variable cost will exceed average fixed cost by the level of average total cost.
D)  average total cost will exceed average variable cost by the level of average fixed cost.E) None of the above
F) A) and D)

Question 8

As the firm in the diagram expands from plant size #3 to plant size #5, it experiences

Accepted Answer

A)  increasing returns.
B)  economies of scale.
C)  diseconomies of scale.
D)  constant costs.E) B) and C)
F) None of the above

Question 9

Which of the following types of firms are least likely to have their MC, AVC, and ATC curves affected by fluctuations in gasoline prices?

Accepted Answer

A)  firms like UPS that use a fleet of gasoline-powered vehicles
B)  taxi cab companies and Uber drivers
C)  companies that operate bus tours to popular vacation destinations
D)  firms like iTunes that distribute their products over the InternetE) A) and B)
F) None of the above

Question 10

Answer the question on the basis of the following information.  The average product when there are two workers

Accepted Answer

A)  is 10.
B)  is 9.
C)  is 28.
D)  cannot be determined from the information given.E) A) and D)
F) B) and C)

Question 11

If you operated a small bakery, which of the following would be a variable cost in the short run?

Accepted Answer

A)  baking ovens
B)  interest on business loans
C)  annual lease payment for use of the building
D)  baking supplies (flour, salt, etc.) E) B) and C)
F) All of the above

Question 12

Discuss what is meant by the long run in economics. When does the long run occur?

Accepted Answer

The short run and the long run are conce...

Question 13

Refer to the graph. Which one of the following would cause a move from point d to point e along short-run average total cost curve ATC ₂?

Accepted Answer

A)  diminishing marginal returns
B)  an increase in the wage rate
C)  a decrease in the wage rate
D)  increasing marginal returnsE) A) and B)
F) B) and C)

Question 14

Which of the following statements is not correct?

Accepted Answer

A)  The real cost of producing X is the quantity of products, R, S, or T etc., which could have been produced with the resources devoted to X.
B)  Diseconomies of scale arise primarily from the difficulties in managing and coordinating a large-scale business enterprise.
C)  The law of diminishing returns explains the fact that the long-run average total cost curve is U-shaped.
D)  Average fixed costs diminish so long as output increases.E) A) and B)
F) None of the above

Question 15

Accounting profits equal total revenue minus

Accepted Answer

A)  total explicit costs.
B)  total implicit costs.
C)  total economic costs.
D)  economic profits.E) All of the above
F) A) and B)

Question 16

Answer the question on the basis of the following cost data.  The average total cost of producing 4 units of output is

Accepted Answer

A)  $7.5.
B)  $6.
C)  $30.
D)  $13.5.E) A) and C)
F) A) and B)

Question 17

Refer to the provided graph, which shows the total product (TP) curve. At which point is marginal product smallest?

Accepted Answer

A)  point a
B)  point b
C)  point c
D)  point dE) A) and B)
F) B) and C)

Question 18

If a firm increases all its inputs by 10 percent and its output increases by 15 percent, the firm is experiencing diseconomies of scale.

Accepted Answer

A) True 
 B)False

Question 19

The law of diminishing returns explains why

Accepted Answer

A)  total cost eventually rises faster and faster.
B)  total cost eventually falls.
C)  total cost eventually rises more and more slowly.
D)  total cost eventually reaches a maximum point.E) B) and C)
F) A) and D)

Question 20

Refer to the short-run production and cost data. In Figure A curve (1) is

Accepted Answer

A)  total product and curve (2) is average product.
B)  total product and curve (2) is marginal product.
C)  average product and curve (2) is marginal product.
D)  marginal product and curve (2) is average product.E) None of the above
F) A) and D)

Exam 9: Businesses and the Costs of Production

Correct Answer
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At any level of output.

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Answer the question on the basis of the following information. The average product when there are two workers

Correct Answer
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What is the difference between the short run and the long run?

Correct Answer
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The short run is a period too brief for ...
View Answer

Answer the question on the basis of the following output data for a firm. Assume that the amounts of all nonlabor resources are fixed. Diminishing marginal returns become evident with the addition of the

Correct Answer
verified

As the firm in the diagram expands from plant size #3 to plant size #5, it experiences

Correct Answer
verified

Refer to the graph. Which one of the following would cause a move from point d to point e along short-run average total cost curve ATC ₂?

Correct Answer
verified

If a firm increases all its inputs by 10 percent and its output increases by 15 percent, the firm is experiencing diseconomies of scale.

Correct Answer
verified

Which of the following types of firms are least likely to have their MC, AVC, and ATC curves affected by fluctuations in gasoline prices?

Correct Answer
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The law of diminishing returns explains why

Correct Answer
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Refer to the provided graph, which shows the total product (TP) curve. At which point is marginal product smallest?

Correct Answer
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Accounting profits are typically

Correct Answer
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Accounting profits equal total revenue minus

Correct Answer
verified

Refer to the short-run production and cost data. In Figure A curve (1) is

Correct Answer
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Discuss what is meant by the long run in economics. When does the long run occur?

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The short run and the long run are conce...
View Answer

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Refer to the graph. A decrease in fixed costs is shown by

Correct Answer
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Which of the following statements is not correct?

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If you operated a small bakery, which of the following would be a variable cost in the short run?

Correct Answer
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Answer the question on the basis of the following cost data. The average total cost of producing 4 units of output is

Correct Answer
verified

Exam 9: Businesses and the Costs of Production

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At any level of output.

Correct AnswerverifiedShow Answer

Answer the question on the basis of the following information. The average product when there are two workers

Correct AnswerverifiedShow Answer

What is the difference between the short run and the long run?

Correct AnswerverifiedThe short run is a period too brief for ...View AnswerShow Answer

Answer the question on the basis of the following output data for a firm. Assume that the amounts of all nonlabor resources are fixed. Diminishing marginal returns become evident with the addition of the

Correct AnswerverifiedShow Answer

As the firm in the diagram expands from plant size #3 to plant size #5, it experiences

Correct AnswerverifiedShow Answer

Refer to the graph. Which one of the following would cause a move from point d to point e along short-run average total cost curve ATC ₂?

Correct AnswerverifiedShow Answer

If a firm increases all its inputs by 10 percent and its output increases by 15 percent, the firm is experiencing diseconomies of scale.

Correct AnswerverifiedShow Answer

Which of the following types of firms are least likely to have their MC, AVC, and ATC curves affected by fluctuations in gasoline prices?

Correct AnswerverifiedShow Answer

The law of diminishing returns explains why

Correct AnswerverifiedShow Answer

Refer to the provided graph, which shows the total product (TP) curve. At which point is marginal product smallest?

Correct AnswerverifiedShow Answer

Accounting profits are typically

Correct AnswerverifiedShow Answer

Accounting profits equal total revenue minus

Correct AnswerverifiedShow Answer

Refer to the short-run production and cost data. In Figure A curve (1) is

Correct AnswerverifiedShow Answer

Discuss what is meant by the long run in economics. When does the long run occur?

Correct AnswerverifiedThe short run and the long run are conce...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Refer to the graph. A decrease in fixed costs is shown by

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

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If you operated a small bakery, which of the following would be a variable cost in the short run?

Correct AnswerverifiedShow Answer

Answer the question on the basis of the following cost data. The average total cost of producing 4 units of output is

Correct AnswerverifiedShow Answer

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Correct Answer
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Correct Answer
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Correct Answer
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The short run is a period too brief for ...
View Answer

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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The short run and the long run are conce...
View Answer

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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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