Question 1

Accountants often ignore implicit costs.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is an example of an implicit cost? (i)  the owner of a firm forgoing an opportunity to earn a large salary working for a Wall Street brokerage firm
(ii)  interest paid on the firm's debt
(iii)  rent paid by the firm to lease office space

Accepted Answer

A)   (ii)  and (iii)  only
B)   (i)  and (iii)  only
C)   (i)  only
D)   (iii)  onlyE) A) and D)
F) B) and C)

Question 3

A production function describes

Accepted Answer

A)   how a firm maximizes profits.
B)   how a firm turns inputs into output.
C)   the minimal cost of producing a given level of output.
D)   the relationship between cost and output.E) None of the above
F) A) and B)

Question 4

Scenario 13-9
Ellie has been working for an engineering firm and earning an annual salary of $80,000. She decides to open her own engineering business. Her annual expenses will include $15,000 for office rent, $3,000 for equipment rental, $1,000 for supplies, $1,200 for utilities, and a $35,000 salary for a secretary/bookkeeper. Ellie will cover her start-up expenses by cashing in a $20,000 certificate of deposit on which she was earning annual interest of $500.
-Refer to Scenario 13-9. According to Ellie's accountant, which of the following revenue totals will yield her business $50,000 in profits?

Accepted Answer

A)   $55,200
B)   $105,200
C)   $132,500
D)   $185,700E) B) and D)
F) C) and D)

Question 5

Scenario 13-21
Suppose that a small family farm sold its output for $100,000 in a given year. The family spent $25,000 on fuel, $40,000 on seed, fertilizer, and pesticides, and $25,000 on equipment, including maintenance. The family members could have earned $20,000 working at other occupations.
-Refer to Scenario 13-21. What is the economic profit for the family farm?

Accepted Answer

Accounting profit = Total reve...

Question 6

Table 13-18 
-Refer to Table 13-18. What is the marginal product of the third worker?

Accepted Answer

450 - 350 ...

Question 7

The marginal product of any input is the

Accepted Answer

A)   increase in total cost associated with a one-unit increase in production.
B)   change in total output associated with a $1.00 increase in total cost.
C)   increase in total cost resulting from the hiring of an additional worker.
D)   increase in total output obtained from one additional unit of that input.E) B) and C)
F) None of the above

Question 8

Because of the greater flexibility that firms have in the long run, all short-run cost curves lie on or above the long-run curve.

Accepted Answer

A) True 
 B)False

Question 9

The value of a business owner's time is an example of

Accepted Answer

A)   an opportunity cost.
B)   a fixed cost.
C)   an explicit cost.
D)   total revenue.E) B) and C)
F) A) and B)

Question 10

Explicit costs

Accepted Answer

A)   do not require an outlay of money by the firm.
B)   enter into the accountant's measurement of a firm's profit.
C)   enter into the economist's measurement of a firm's profit.
D)   Both b and c are correct.E) B) and C)
F) A) and D)

Question 11

Table 13-3 
-Refer to Table 13-3. The marginal product of the third worker is

Accepted Answer

A)   230 units.
B)   100 units.
C)   77 units.
D)   60 units.E) None of the above
F) A) and D)

Question 12

Economists normally assume that the goal of a firm is to

Accepted Answer

A)   maximize its total revenue.
B)   maximize its profit.
C)   minimize its explicit costs.
D)   minimize its total cost.E) A) and B)
F) None of the above

Question 13

Bubba is a shrimp fisherman who can catch 4,000 pounds of shrimp per year. Bubba is considering hiring his cousin Bobby to work for him. Bobby can catch 3,000 pounds of shrimp per year. If Bubba hires Bobby, what will be the total output of his shrimp business?

Accepted Answer

A)   7,000 pounds
B)   3,500 pounds
C)   3,000 pounds
D)   1,000 poundsE) A) and B)
F) A) and C)

Question 14

The shape of the total-cost curve is inversely related to the shape of the production function.

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) All of the above
F) B) and D)

Question 16

The marginal product of labor can be defined as the change in

Accepted Answer

A)   profit divided by the change in labor.
B)   output divided by the change in labor.
C)   labor divided by the change in output.
D)   labor divided by the change in total cost.E) A) and D)
F) A) and B)

Question 17

The cost of producing an additional unit of a good is not the same as the average cost of the good.

Accepted Answer

A) True 
 B)False

Question 18

Table 13-19 
-Refer to Table 13-19. What is the shape of the average-fixed-cost curve?

Accepted Answer

AFC is always declining as out...

Question 19

A firm's opportunity costs of production are equal to its

Accepted Answer

A)   explicit costs only.
B)   implicit costs only.
C)   explicit costs + implicit costs.
D)   explicit costs + implicit costs + total revenue.E) All of the above
F) A) and D)

Question 20

Scenario 13-5
Suppose that Emily opens a restaurant. She receives a loan from a bank for $200,000. She withdraws $100,000 from her personal savings account. The interest rate on the loan is 6%, and the interest rate on her savings account is 2%.
-Refer to Scenario 13-5. Emily's implicit cost of capital is

Accepted Answer

A)   $2,000.
B)   $4,000.
C)   $12,000.
D)   $14,000.E) A) and B)
F) A) and C)

Exam 13: The Costs of Production

Correct Answer
verified

The cost of producing an additional unit of a good is not the same as the average cost of the good.

Correct Answer
verified

Which of the following is an example of an implicit cost? (i) the owner of a firm forgoing an opportunity to earn a large salary working for a Wall Street brokerage firm (ii) interest paid on the firm's debt (iii) rent paid by the firm to lease office space

Correct Answer
verified

Economists normally assume that the goal of a firm is to

Correct Answer
verified

Correct Answer
verified

Accountants often ignore implicit costs.

Correct Answer
verified

Explicit costs

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

Correct Answer
verified

Table 13-19 -Refer to Table 13-19. What is the shape of the average-fixed-cost curve?

Correct Answer
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AFC is always declining as out...
View Answer

Correct Answer
verified
Accounting profit = Total reve...
View Answer

Table 13-3 -Refer to Table 13-3. The marginal product of the third worker is

Correct Answer
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Bubba is a shrimp fisherman who can catch 4,000 pounds of shrimp per year. Bubba is considering hiring his cousin Bobby to work for him. Bobby can catch 3,000 pounds of shrimp per year. If Bubba hires Bobby, what will be the total output of his shrimp business?

Correct Answer
verified

The value of a business owner's time is an example of

Correct Answer
verified

Table 13-18 -Refer to Table 13-18. What is the marginal product of the third worker?

Correct Answer
verified
450 - 350 ...
View Answer

The shape of the total-cost curve is inversely related to the shape of the production function.

Correct Answer
verified

Because of the greater flexibility that firms have in the long run, all short-run cost curves lie on or above the long-run curve.

Correct Answer
verified

A production function describes

Correct Answer
verified

A firm's opportunity costs of production are equal to its

Correct Answer
verified

The marginal product of labor can be defined as the change in

Correct Answer
verified

The marginal product of any input is the

Correct Answer
verified

Exam 13: The Costs of Production

Correct AnswerverifiedShow Answer

The cost of producing an additional unit of a good is not the same as the average cost of the good.

Correct AnswerverifiedShow Answer

Which of the following is an example of an implicit cost? (i) the owner of a firm forgoing an opportunity to earn a large salary working for a Wall Street brokerage firm (ii) interest paid on the firm's debt (iii) rent paid by the firm to lease office space

Correct AnswerverifiedShow Answer

Economists normally assume that the goal of a firm is to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Accountants often ignore implicit costs.

Correct AnswerverifiedShow Answer

Explicit costs

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Table 13-19 -Refer to Table 13-19. What is the shape of the average-fixed-cost curve?

Correct AnswerverifiedAFC is always declining as out...View AnswerShow Answer

Correct AnswerverifiedAccounting profit = Total reve...View AnswerShow Answer

Table 13-3 -Refer to Table 13-3. The marginal product of the third worker is

Correct AnswerverifiedShow Answer

Bubba is a shrimp fisherman who can catch 4,000 pounds of shrimp per year. Bubba is considering hiring his cousin Bobby to work for him. Bobby can catch 3,000 pounds of shrimp per year. If Bubba hires Bobby, what will be the total output of his shrimp business?

Correct AnswerverifiedShow Answer

The value of a business owner's time is an example of

Correct AnswerverifiedShow Answer

Table 13-18 -Refer to Table 13-18. What is the marginal product of the third worker?

Correct Answerverified450 - 350 ...View AnswerShow Answer

The shape of the total-cost curve is inversely related to the shape of the production function.

Correct AnswerverifiedShow Answer

Because of the greater flexibility that firms have in the long run, all short-run cost curves lie on or above the long-run curve.

Correct AnswerverifiedShow Answer

A production function describes

Correct AnswerverifiedShow Answer

A firm's opportunity costs of production are equal to its

Correct AnswerverifiedShow Answer

The marginal product of labor can be defined as the change in

Correct AnswerverifiedShow Answer

The marginal product of any input is the

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
AFC is always declining as out...
View Answer

Correct Answer
verified
Accounting profit = Total reve...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
450 - 350 ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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