Question 1

Economists normally assume that the goal of a firm is to (i) 
Sell as much of its product as possible.
(ii) 
Set the price of the product as high as possible.
(iii) 
Maximize profit.

Accepted Answer

A)   (i) and (ii) only
B)   (ii) and (iii) only
C)   (iii) only
D)   (i) , (ii) ,and (iii) E) None of the above
F) A) and C)

Question 2

Constant returns to 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)   long-run average total costs do not vary as output increases.E) A) and B)
F) All of the above

Question 3

The things that must be forgone to acquire a good are called

Accepted Answer

A)   implicit costs.
B)   opportunity costs.
C)   explicit costs.
D)   accounting costs.E) B) and C)
F) A) and D)

Question 4

Pete owns a shoe-shine business.His accountant most likely includes which of the following costs on his financial statements?

Accepted Answer

A)   wages Pete could earn washing windows
B)   dividends Pete's money was earning in the stock market before Pete sold his stock and bought a shoe-shine booth
C)   the cost of shoe polish
D)   Both b and c are correct.E) B) and D)
F) B) and C)

Question 5

At all levels of production higher than the point where the marginal cost curve crosses the average variable cost curve,average variable cost

Accepted Answer

A)   rises.
B)   remains unaffected.
C)   falls.
D)   All of the above are possible depending on the shape of the marginal cost curve.E) A) and C)
F) A) and B)

Question 6

The Big Blue Sky jet company has long-run total costs of $20 million if it produces 5 jets and long-run total costs of $24 million if it produces 6 jets.The Big Blue Sky jet company is experiencing

Accepted Answer

A)   economies of scale.
B)   constant returns to scale.
C)   diseconomies of scale.
D)   negative profits.E) None of the above
F) A) and D)

Question 7

The average-total-cost curve intersects

Accepted Answer

A)   average fixed cost at the minimum of average total cost.
B)   average variable cost at the minimum of average total cost.
C)   marginal cost at the minimum of average total cost.
D)   marginal cost at the minimum of marginal cost.E) None of the above
F) A) and D)

Question 8

In his book,An Inquiry into the Nature and Causes of the Wealth of Nations,Adam Smith described a visit he made to a

Accepted Answer

A)   car factory.
B)   pin factory.
C)   washing machine factory.
D)   farm.E) A) and B)
F) B) and C)

Question 9

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) None of the above
F) All of the above

Question 10

When a firm experiences constant returns to scale,

Accepted Answer

A)   long-run average total cost is unchanged,even when output increases.
B)   long-run marginal cost is greater than long-run average total cost.
C)   long-run marginal cost is less than long-run average total cost.
D)   the firm is likely to experience coordination problems.E) A) and B)
F) A) and C)

Question 11

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) B) and D)
F) B) and C)

Question 12

Explicit costs

Accepted Answer

A)   require an outlay of money by the firm.
B)   include all of the firm's opportunity costs.
C)   include the value of the business owner's time.
D)   Both b and c are correct.E) B) and D)
F) None of the above

Question 13

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) C) and D)
F) A) and B)

Question 14

Consider the following information about bread production at Beth's Bakery:  Beth pays all her workers the same wage,and labor is her only variable cost.From this information we can conclude that Beth's marginal cost

Accepted Answer

A)   declines as output increases from 0 to 33,but increases after that.
B)   declines as output increases from 0 to 11,but increases after that.
C)   increases as output increases from 0 to 11,but declines after that.
D)   is constant.E) None of the above
F) All of the above

Question 15

Table 13-12
Betty's Bakery
 
-Refer to Table 13-12.What is the average fixed cost of producing 8 cakes at Betty's Bakery?

Accepted Answer

A)   $2.12
B)   $3.13
C)   $20.00
D)   $24.37E) B) and C)
F) A) and B)

Question 16

Variable cost divided by the change in quantity produced is

Accepted Answer

A)   average variable cost.
B)   marginal cost.
C)   average total cost.
D)   None of the above is correct.E) None of the above
F) All of the above

Question 17

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 18

Table 13-2
 
-Refer to Table 13-2.What is the total output of five workers?

Accepted Answer

Total output of four workers =...

Question 19

In the long run Irene's Ice Cream Parlor incurs total costs of $2,500 when output is 1,250 units and $4,000 when output is 1,500 units.For this range of output,Irine's exhibits

Accepted Answer

A)   economies of scale.
B)   constant returns to scale.
C)   diseconomies of scale.
D)   efficient scale.E) A) and B)
F) A) and D)

Question 20

Table 13-6
Wooden Chair Factory
 
-Refer to Table 13-6.Each worker at the Wooden Chair Factory costs $12 per hour.The cost of each machine is $20 per day regardless of the number of chairs produced.If the factory produces at a rate of 70 chairs per hour and operates 8 hours per day,what is the factory's total labor cost per day?

Accepted Answer

A)   $72
B)   $112
C)   $576
D)   $616E) A) and B)
F) All of the above

Exam 13: The Costs of Production

In the long run Irene's Ice Cream Parlor incurs total costs of $2,500 when output is 1,250 units and $4,000 when output is 1,500 units.For this range of output,Irine's exhibits

Correct Answer
verified

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

Pete owns a shoe-shine business.His accountant most likely includes which of the following costs on his financial statements?

Correct Answer
verified

The things that must be forgone to acquire a good are called

Correct Answer
verified

Consider the following information about bread production at Beth's Bakery: Beth pays all her workers the same wage,and labor is her only variable cost.From this information we can conclude that Beth's marginal cost

Correct Answer
verified

Table 13-12 Betty's Bakery -Refer to Table 13-12.What is the average fixed cost of producing 8 cakes at Betty's Bakery?

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

At all levels of production higher than the point where the marginal cost curve crosses the average variable cost curve,average variable cost

Correct Answer
verified

Which of the following expressions is correct?

Correct Answer
verified

Explicit costs

Correct Answer
verified

Table 13-2 -Refer to Table 13-2.What is the total output of five workers?

Correct Answer
verified
Total output of four workers =...
View Answer

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

Correct Answer
verified

When a firm experiences constant returns to scale,

Correct Answer
verified

The Big Blue Sky jet company has long-run total costs of $20 million if it produces 5 jets and long-run total costs of $24 million if it produces 6 jets.The Big Blue Sky jet company is experiencing

Correct Answer
verified

Constant returns to scale occur when a firm's

Correct Answer
verified

Variable cost divided by the change in quantity produced is

Correct Answer
verified

In his book,An Inquiry into the Nature and Causes of the Wealth of Nations,Adam Smith described a visit he made to a

Correct Answer
verified

The average-total-cost curve intersects

Correct Answer
verified

Economists normally assume that the goal of a firm is to (i) Sell as much of its product as possible. (ii) Set the price of the product as high as possible. (iii) Maximize profit.

Correct Answer
verified

Exam 13: The Costs of Production

In the long run Irene's Ice Cream Parlor incurs total costs of $2,500 when output is 1,250 units and $4,000 when output is 1,500 units.For this range of output,Irine's exhibits

Correct AnswerverifiedShow Answer

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

Pete owns a shoe-shine business.His accountant most likely includes which of the following costs on his financial statements?

Correct AnswerverifiedShow Answer

The things that must be forgone to acquire a good are called

Correct AnswerverifiedShow Answer

Consider the following information about bread production at Beth's Bakery: Beth pays all her workers the same wage,and labor is her only variable cost.From this information we can conclude that Beth's marginal cost

Correct AnswerverifiedShow Answer

Table 13-12 Betty's Bakery -Refer to Table 13-12.What is the average fixed cost of producing 8 cakes at Betty's Bakery?

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

At all levels of production higher than the point where the marginal cost curve crosses the average variable cost curve,average variable cost

Correct AnswerverifiedShow Answer

Which of the following expressions is correct?

Correct AnswerverifiedShow Answer

Explicit costs

Correct AnswerverifiedShow Answer

Table 13-2 -Refer to Table 13-2.What is the total output of five workers?

Correct AnswerverifiedTotal output of four workers =...View AnswerShow 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

When a firm experiences constant returns to scale,

Correct AnswerverifiedShow Answer

The Big Blue Sky jet company has long-run total costs of $20 million if it produces 5 jets and long-run total costs of $24 million if it produces 6 jets.The Big Blue Sky jet company is experiencing

Correct AnswerverifiedShow Answer

Constant returns to scale occur when a firm's

Correct AnswerverifiedShow Answer

Variable cost divided by the change in quantity produced is

Correct AnswerverifiedShow Answer

In his book,An Inquiry into the Nature and Causes of the Wealth of Nations,Adam Smith described a visit he made to a

Correct AnswerverifiedShow Answer

The average-total-cost curve intersects

Correct AnswerverifiedShow Answer

Economists normally assume that the goal of a firm is to (i) Sell as much of its product as possible. (ii) Set the price of the product as high as possible. (iii) Maximize profit.

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Total output of four workers =...
View 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