Question 1

Some costs do not vary with the quantity of output produced.Those costs are called

Accepted Answer

A)   marginal costs.
B)   average costs.
C)   fixed costs.
D)   incurred costs.E) A) and B)
F) B) and C)

Question 2

If the marginal cost curve is rising,then so is the average total cost curve.

Accepted Answer

A) True 
 B)False

Question 3

Kirsten sells 300 glasses of lemonade at $0.50 each.Her total costs are $125.Her profits are

Accepted Answer

A)   $25.
B)   $124.50.
C)   $125.
D)   $150.E) A) and D)
F) A) and B)

Question 4

Larry's Lunchcart is a small street vendor business.If Larry makes 15 pretzels in his first hour of business and incurs a total cost of $16.50,his average total cost per pretzel is

Accepted Answer

A)   $1.10.
B)   $6.50.
C)   $15.00.
D)   $16.50.E) A) and C)
F) A) and D)

Question 5

According to the mathematical laws that govern the relationship between average total cost and marginal cost,where must these two curves intersect?

Accepted Answer

The two curves will ...

Question 6

David's firm experiences diminishing marginal product for all ranges of inputs.The total cost curve associated with David's firm

Accepted Answer

A)   gets flatter as output increases.
B)   gets steeper as output increases.
C)   is constant for all ranges of output.
D)   is unrelated to the production function.E) B) and D)
F) B) and C)

Question 7

Figure 13-9
The figure below depicts average total cost functions for a firm that produces automobiles. 
-Refer to Figure 13-9.At levels of output between M and N,the firm experiences

Accepted Answer

A)   economies of scale.
B)   diseconomies of scale.
C)   constant returns to scale.
D)   both the benefits of specialization and diminishing marginal productivity.E) All of the above
F) A) and C)

Question 8

What are opportunity costs? How do explicit and implicit costs relate to opportunity costs?

Accepted Answer

The opportunity cost of an ite...

Question 9

A certain firm manufactures and sells computer chips.Last year it sold 2 million chips at a price of $10 per chip.For last year,the firm's

Accepted Answer

A)   accounting profit amounted to $20 million.
B)   economic profit amounted to $20 million.
C)   total revenue amounted to $20 million.
D)   explicit costs amounted to $20 million.E) B) and D)
F) A) and B)

Question 10

Economists normally assume that the goal of a firm is to

Accepted Answer

A)   (i) and (ii) are true.
B)   (ii) and (iii) are true.
C)   (iii) is true.
D)   (i) and (iii) are true.E) All of the above
F) A) and D)

Question 11

Profit equals marginal revenue minus marginal cost.

Accepted Answer

A) True 
 B)False

Question 12

The marginal product of labor can be defined as

Accepted Answer

A)   change in profit/change in labor.
B)   change in output/change in labor.
C)   change in labor/change in output.
D)   change in labor/change in total cost.E) All of the above
F) A) and B)

Question 13

An example of an opportunity cost that is also an implicit cost is

Accepted Answer

A)   a lease payment.
B)   the cost of raw materials.
C)   the value of the business owner's time.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 14

The economic field of industrial organization examines how firms' decisions about prices and quantities depend on the market conditions they face.

Accepted Answer

A) True 
 B)False

Question 15

Which of these assumptions 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.E) C) and D)
F) All of the above

Question 16

Scenario 13-7
Farmer Jack is a watermelon farmer.If Jack plants no seeds on his farm,he gets no harvest.If he plants 1 bag of seeds,he gets 30 watermelons.If he plants 2 bags of seeds,he gets 50 watermelons.If he plants 3 bags of seeds he gets 60 watermelons.A bag of seeds costs $100,and the costs of seeds are his only costs.
-Refer to Scenario 13-7.Which of the following statements is (are) true?

Accepted Answer

A)   (i) only
B)   (i) and (ii) only
C)   (ii) only
D)   (i) and (iii) onlyE) A) and B)
F) All of the above

Question 17

Fixed costs can be defined as costs that

Accepted Answer

A)   vary inversely with production.
B)   vary in proportion with production.
C)   are incurred only when production is large enough.
D)   are incurred even if nothing is produced.E) All of the above
F) B) and C)

Question 18

Which of the following expressions is correct?

Accepted Answer

A)   accounting profit = total revenue - explicit costs
B)   economic profit = total revenue - implicit costs
C)   economic profit = total revenue - explicit costs
D)   Both a and b are correct.E) A) and C)
F) None of the above

Question 19

Tom's Tent Company has total fixed costs of $300,000 per year.The firm's average variable cost is $80 for 10,000 tents.At that level of output,the firm's average total costs equal

Accepted Answer

A)   $80
B)   $90
C)   $100
D)   $110E) All of the above
F) A) and B)

Question 20

Scenario 13-3
Tony is a wheat farmer,but he also spends part of his day teaching guitar lessons.Due to the popularity of his local country western band,Farmer Tony has more students requesting lessons than he has time for if he is to also maintain his farming business.Farmer Tony charges $25 an hour for his guitar lessons.One spring day,he spends 10 hours in his fields planting $130 worth of seeds on his farm.He expects that the seeds he planted will yield $300 worth of wheat.
-Refer to Scenario 13-3.What is the total opportunity cost of the day that Farmer Tony incurred for his spring day in the field planting wheat?

Accepted Answer

A)   $130
B)   $250
C)   $300
D)   $380E) A) and D)
F) All of the above

Exam 13: The Costs of Production

Profit equals marginal revenue minus marginal cost.

Correct Answer
verified

Tom's Tent Company has total fixed costs of $300,000 per year.The firm's average variable cost is $80 for 10,000 tents.At that level of output,the firm's average total costs equal

Correct Answer
verified

A certain firm manufactures and sells computer chips.Last year it sold 2 million chips at a price of $10 per chip.For last year,the firm's

Correct Answer
verified

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9.At levels of output between M and N,the firm experiences

Correct Answer
verified

Fixed costs can be defined as costs that

Correct Answer
verified

The economic field of industrial organization examines how firms' decisions about prices and quantities depend on the market conditions they face.

Correct Answer
verified

What are opportunity costs? How do explicit and implicit costs relate to opportunity costs?

Correct Answer
verified
The opportunity cost of an ite...
View Answer

Some costs do not vary with the quantity of output produced.Those costs are called

Correct Answer
verified

David's firm experiences diminishing marginal product for all ranges of inputs.The total cost curve associated with David's firm

Correct Answer
verified

According to the mathematical laws that govern the relationship between average total cost and marginal cost,where must these two curves intersect?

Correct Answer
verified
The two curves will ...
View Answer

Economists normally assume that the goal of a firm is to

Correct Answer
verified

If the marginal cost curve is rising,then so is the average total cost curve.

Correct Answer
verified

Kirsten sells 300 glasses of lemonade at $0.50 each.Her total costs are $125.Her profits are

Correct Answer
verified

Which of these assumptions is often realistic for a firm in the short run?

Correct Answer
verified

The marginal product of labor can be defined as

Correct Answer
verified

Larry's Lunchcart is a small street vendor business.If Larry makes 15 pretzels in his first hour of business and incurs a total cost of $16.50,his average total cost per pretzel is

Correct Answer
verified

Which of the following expressions is correct?

Correct Answer
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Correct Answer
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An example of an opportunity cost that is also an implicit cost is

Correct Answer
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Correct Answer
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Exam 13: The Costs of Production

Profit equals marginal revenue minus marginal cost.

Correct AnswerverifiedShow Answer

Tom's Tent Company has total fixed costs of $300,000 per year.The firm's average variable cost is $80 for 10,000 tents.At that level of output,the firm's average total costs equal

Correct AnswerverifiedShow Answer

A certain firm manufactures and sells computer chips.Last year it sold 2 million chips at a price of $10 per chip.For last year,the firm's

Correct AnswerverifiedShow Answer

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9.At levels of output between M and N,the firm experiences

Correct AnswerverifiedShow Answer

Fixed costs can be defined as costs that

Correct AnswerverifiedShow Answer

The economic field of industrial organization examines how firms' decisions about prices and quantities depend on the market conditions they face.

Correct AnswerverifiedShow Answer

What are opportunity costs? How do explicit and implicit costs relate to opportunity costs?

Correct AnswerverifiedThe opportunity cost of an ite...View AnswerShow Answer

Some costs do not vary with the quantity of output produced.Those costs are called

Correct AnswerverifiedShow Answer

David's firm experiences diminishing marginal product for all ranges of inputs.The total cost curve associated with David's firm

Correct AnswerverifiedShow Answer

According to the mathematical laws that govern the relationship between average total cost and marginal cost,where must these two curves intersect?

Correct AnswerverifiedThe two curves will ...View AnswerShow Answer

Economists normally assume that the goal of a firm is to

Correct AnswerverifiedShow Answer

If the marginal cost curve is rising,then so is the average total cost curve.

Correct AnswerverifiedShow Answer

Kirsten sells 300 glasses of lemonade at $0.50 each.Her total costs are $125.Her profits are

Correct AnswerverifiedShow Answer

Which of these assumptions is often realistic for a firm in the short run?

Correct AnswerverifiedShow Answer

The marginal product of labor can be defined as

Correct AnswerverifiedShow Answer

Larry's Lunchcart is a small street vendor business.If Larry makes 15 pretzels in his first hour of business and incurs a total cost of $16.50,his average total cost per pretzel is

Correct AnswerverifiedShow Answer

Which of the following expressions is correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

An example of an opportunity cost that is also an implicit cost is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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The opportunity cost of an ite...
View Answer

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The two curves will ...
View Answer

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