Question 1

Brady Industries has average variable costs of $1 and average total costs of $3 when it produces 500 units of output.The firm's total fixed costs equal

Accepted Answer

A)   $2.
B)   $4.
C)   $1,000.
D)   $2,000.E) A) and B)
F) All of the above

Question 2

Which of the following measures of cost is best described as "the cost of a typical unit of output if total cost is divided evenly over all the units produced?"

Accepted Answer

A)   average fixed cost
B)   average variable cost
C)   average total cost
D)   marginal costE) B) and C)
F) A) and D)

Question 3

Average total cost and marginal cost express information that is already contained in a firm's total cost.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following statements is correct?

Accepted Answer

A)   If marginal cost is rising,then average total cost is rising.
B)   If marginal cost is rising,then average variable cost is rising.
C)   If average variable cost is rising,then marginal cost is minimized.
D)   If average total cost is rising,then marginal cost is greater than average total cost.E) C) and D)
F) A) and C)

Question 5

An example of an explicit cost would be the wages that a business owner pays her employees.

Accepted Answer

A) True 
 B)False

Question 6

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

Question 7

Total revenue minus only implicit costs is called

Accepted Answer

A)   accounting profit.
B)   economic profit.
C)   opportunity cost.
D)   None of the above is correct.E) A) and B)
F) A) and C)

Question 8

A firm's total profit equals its marginal revenue minus its marginal cost.

Accepted Answer

A) True 
 B)False

Question 9

Table 12-13
 
-Refer to Table 12-13.What is average fixed cost when output is 40 units?

Accepted Answer

A)   $1.00
B)   $3.32
C)   $5.00
D)   $8.00E) A) and D)
F) A) and C)

Question 10

Table 12-1
 
-Refer to Table 12-1.What is total output when 5 workers are hired?

Accepted Answer

A)   -10
B)   120
C)   160
D)   190E) C) and D)
F) B) and C)

Question 11

Table 12-1
 
-Refer to Table 12-1.What is total output when 1 worker is hired?

Accepted Answer

A)   30
B)   40
C)   120
D)   160E) A) and D)
F) B) and C)

Question 12

Figure 12-9
The figure below depicts average total cost functions for a firm that produces automobiles. 
-Refer to Figure 12-9.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) B) and C)
F) A) and D)

Question 13

The Big Box corporation produced and sold 500 units of output.The average cost of production per unit was $50.Each unit sold for a price of $65.The Big Box corporation's total revenues are

Accepted Answer

A)   $7,500.
B)   $25,000.
C)   $32,500.
D)   $67,500.E) A) and B)
F) All of the above

Question 14

Figure 12-3 
-Refer to Figure 12-3.The changing slope of the total cost curve reflects

Accepted Answer

A)   decreasing average variable cost.
B)   decreasing average total cost.
C)   decreasing marginal product.
D)   increasing fixed cost.E) B) and D)
F) B) and C)

Question 15

Diseconomies of scale occur when a firm's

Accepted Answer

A)   marginal costs are constant as output increases.
B)   long-run average total costs are decreasing as output increases.
C)   long-run average total costs are increasing as output increases.
D)   marginal costs are equal to average total costs for all levels of output.E) C) and D)
F) B) and D)

Question 16

Economic profit is equal to total revenue minus the

Accepted Answer

A)   explicit cost of producing goods and services.
B)   opportunity cost of producing goods and services.
C)   accounting cost of producing goods and services.
D)   implicit cost of producing goods and services.E) All of the above
F) A) and B)

Question 17

In the short run,if a firm produces nothing,total costs are zero.

Accepted Answer

A) True 
 B)False

Question 18

Table 12-16
Listed in the table are the long-run total costs for three different firms.
 
-Refer to Table 12-16.Firm C is experiencing economies of scale.

Accepted Answer

A) True 
 B)False

Question 19

Table 12-5
 
-Refer to Table 12-5.Assume that fixed costs are $500,and variable costs are $100 per worker.For this firm,what are the shapes of the production function and the total-cost curve?

Accepted Answer

A)   Both the production function and total-cost curve are increasing at an increasing rate.
B)   Both the production function and total-cost curve are increasing at a decreasing rate.
C)   The production function is increasing at a decreasing rate,whereas the total-cost function is increasing at an increasing rate.
D)   The production function is increasing at an increasing rate,whereas the total-cost function is increasing at a decreasing rate.E) B) and C)
F) All of the above

Question 20

At low levels of production,the firm

Accepted Answer

A)   benefits from increased size because it can take advantage of greater specialization.
B)   has the potential for economies of scale.
C)   is unlikely to experiences acute problems with coordination.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Exam 12: The Costs of Production

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

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Average total cost and marginal cost express information that is already contained in a firm's total cost.

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At low levels of production,the firm

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A firm's total profit equals its marginal revenue minus its marginal cost.

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In the short run,if a firm produces nothing,total costs are zero.

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An example of an explicit cost would be the wages that a business owner pays her employees.

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Economic profit is equal to total revenue minus the

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Table 12-16 Listed in the table are the long-run total costs for three different firms. -Refer to Table 12-16.Firm C is experiencing economies of scale.

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Which of the following statements is correct?

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The Big Box corporation produced and sold 500 units of output.The average cost of production per unit was $50.Each unit sold for a price of $65.The Big Box corporation's total revenues are

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Table 12-13 -Refer to Table 12-13.What is average fixed cost when output is 40 units?

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Table 12-5 -Refer to Table 12-5.Assume that fixed costs are $500,and variable costs are $100 per worker.For this firm,what are the shapes of the production function and the total-cost curve?

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Which of the following measures of cost is best described as "the cost of a typical unit of output if total cost is divided evenly over all the units produced?"

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Table 12-1 -Refer to Table 12-1.What is total output when 5 workers are hired?

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Brady Industries has average variable costs of $1 and average total costs of $3 when it produces 500 units of output.The firm's total fixed costs equal

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Figure 12-3 -Refer to Figure 12-3.The changing slope of the total cost curve reflects

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Total revenue minus only implicit costs is called

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Figure 12-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 12-9.At levels of output between M and N,the firm experiences

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Table 12-1 -Refer to Table 12-1.What is total output when 1 worker is hired?

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Diseconomies of scale occur when a firm's

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