Question 1

Which field of economics studies how the number of firms affects the prices in a market and the efficiency of market outcomes?

Accepted Answer

A)  macroeconomics
B)  industrial organization
C)  labor economics
D)  monetary economicsE) B) and D)
F) B) and C)

Question 2

Consider the following information about baseball production at Bobby's Baseball Factory:  Bobby pays all his workers the same wage, and labor is his only variable cost. From this information we can conclude that Bobby's average variable cost decreases

Accepted Answer

A)  as output rises from 0 to 10, but rises after that.
B)  as output rises from 0 to 26, but rises after that.
C)  as output rises from 0 to 33, but increases after that.
D)  continually as output rises.E) A) and B)
F) A) and D)

Question 3

The field of industrial organization addresses how the number of firms affects prices in a market and the efficiency of the market outcome.

Accepted Answer

A) True 
 B)False

Question 4

The minimum points of the average variable cost and average total cost curves occur where the

Accepted Answer

A)  marginal cost curve lies below the average variable cost and average total cost curves.
B)  marginal cost curve intersects those curves.
C)  average variable cost and average total cost curves intersect.
D)  slope of total cost is the smallest.E) All of the above
F) None of the above

Question 5

Scenario 13-18
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 13-18. Which of the following statements is (are)  true?
(i) Farmer Jack experiences decreasing marginal product.
(ii) Farmer Jack's production function is nonlinear.
(iii) Farmer Jack's total cost curve is linear.

Accepted Answer

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

Question 6

Figure 13-5 
-Refer to Figure 13-5. Curve D is increasing because

Accepted Answer

A)  of diminishing marginal product.
B)  of increasing marginal product.
C)  marginal product first increases, then decreases.
D)  marginal product first decreases, then increases.E) A) and D)
F) None of the above

Question 7

If Kevin's children run a lemonade stand for a day and sell 200 glasses of lemonade at $0.50 each, their total revenues are

Accepted Answer

A)  $100.
B)  $199.50.
C)  $200.
D)  $400.E) A) and B)
F) A) and C)

Question 8

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

Accepted Answer

MC = change in TC/change in Q, so althou...

Question 9

Figure 13-6 
-Refer to Figure 13-6. Why doesn't the total cost curve begin at the origin (the point 0,0) ?

Accepted Answer

A)  because variable costs are positive when output is zero
B)  because fixed costs are positive when output is zero
C)  because the firm is producing at the efficient scale
D)  because the firm is maximizing profitsE) A) and C)
F) A) and D)

Question 10

Average total cost reveals how much total cost will change as the firm alters its level of production.

Accepted Answer

A) True 
 B)False

Question 11

If a firm experiences constant returns to scale at all output levels, then its long-run average total cost curve would

Accepted Answer

A)  slope downward.
B)  be horizontal.
C)  slope upward.
D)  slope downward for low output levels and upward for high output levels.E) C) and D)
F) A) and B)

Question 12

Variable cost divided by quantity produced is

Accepted Answer

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

Question 13

Table 13-11 
-Refer to Table 13-11. What is the marginal cost of producing the 1st poster?

Accepted Answer

A)  $1
B)  $10
C)  $11
D)  It can't be determined from the information given.E) A) and B)
F) A) and C)

Question 14

Table 13-7
The Flying Elvis Copter Rides 
-Refer to Table 13-7. What is the value of C?

Accepted Answer

A)  $25
B)  $50
C)  $100
D)  $200E) C) and D)
F) A) and B)

Question 15

The average fixed cost curve

Accepted Answer

A)  always declines with increased levels of output.
B)  always rises with increased levels of output.
C)  declines as long as it is above marginal cost.
D)  declines as long as it is below marginal cost.E) A) and D)
F) All of the above

Question 16

Table 13-12
Eileen's Elegant Earrings produces pairs of earrings for its mail order catalogue business. Each pair is shipped in a separate box. She rents a small room for $150 a week in the downtown business district that serves as her factory. She can hire workers for $275 a week. There are no implicit costs. 
-Refer to Table 13-12. Eileen has received an order for 3,000 boxes of earrings for next week. If she expects that the trend in the marginal product of labor will continue in the same direction, it is most likely that her best decision will be to

Accepted Answer

A)  not commit to meeting the order until she can move to a larger room and hire more workers to produce the earrings.
B)  close her business until she is able to hire more productive workers.
C)  hire about 12 new workers and hope she can satisfy the order.
D)  commit to meeting the order and then take three weeks to complete the job.E) B) and D)
F) C) and D)

Question 17

When a firm's long-run average total costs do not vary as output increases, the firm exhibits

Accepted Answer

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

Question 18

Average total cost (ATC)  is calculated as follows:

Accepted Answer

A)  ATC = (change in total cost) /(change in quantity of output) .
B)  ATC = (change in total cost) /(change in quantity of input) .
C)  ATC = (total cost) /(quantity of output) .
D)  ATC = (total cost) /(quantity of input) .E) None of the above
F) A) and D)

Question 19

​Sebastian decides to open a tree farm. When deciding to open his own business, he turned down two separate job offers of $25,000 and $30,000 and withdrew $20,000 from his savings. Sebastian's savings account paid 3 percent interest. He also borrowed $20,000 from his brother, whom he pays 2 percent interest per year. He spent $15,000 to purchase supplies and earned $50,000 in revenue during his first year. What are Sebastian's implicit costs from running his own business?

Accepted Answer

A)  ​$30,600
B)  ​$55,600
C)  ​$50,000
D)  ​$75,600E) C) and D)
F) A) and D)

Question 20

Figure 13-7 
-Refer to Figure 13-7. Which of the figures represents the production function for a typical firm?

Accepted Answer

A)  Figure 1
B)  Figure 2
C)  Figure 3
D)  Figure 4E) None of the above
F) A) and B)

Exam 13: The Costs of Production

Correct Answer
verified

When a firm's long-run average total costs do not vary as output increases, the firm exhibits

Correct Answer
verified

The average fixed cost curve

Correct Answer
verified

If a firm experiences constant returns to scale at all output levels, then its long-run average total cost curve would

Correct Answer
verified

The minimum points of the average variable cost and average total cost curves occur where the

Correct Answer
verified

If Kevin's children run a lemonade stand for a day and sell 200 glasses of lemonade at $0.50 each, their total revenues are

Correct Answer
verified

Correct Answer
verified

Average total cost reveals how much total cost will change as the firm alters its level of production.

Correct Answer
verified

Which field of economics studies how the number of firms affects the prices in a market and the efficiency of market outcomes?

Correct Answer
verified

The field of industrial organization addresses how the number of firms affects prices in a market and the efficiency of the market outcome.

Correct Answer
verified

Consider the following information about baseball production at Bobby's Baseball Factory: Bobby pays all his workers the same wage, and labor is his only variable cost. From this information we can conclude that Bobby's average variable cost decreases

Correct Answer
verified

Table 13-11 -Refer to Table 13-11. What is the marginal cost of producing the 1st poster?

Correct Answer
verified

Table 13-7 The Flying Elvis Copter Rides -Refer to Table 13-7. What is the value of C?

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified
MC = change in TC/change in Q, so althou...
View Answer

Figure 13-5 -Refer to Figure 13-5. Curve D is increasing because

Correct Answer
verified

Figure 13-6 -Refer to Figure 13-6. Why doesn't the total cost curve begin at the origin (the point 0,0) ?

Correct Answer
verified

Figure 13-7 -Refer to Figure 13-7. Which of the figures represents the production function for a typical firm?

Correct Answer
verified

Variable cost divided by quantity produced is

Correct Answer
verified

Average total cost (ATC) is calculated as follows:

Correct Answer
verified

Exam 13: The Costs of Production

Correct AnswerverifiedShow Answer

When a firm's long-run average total costs do not vary as output increases, the firm exhibits

Correct AnswerverifiedShow Answer

The average fixed cost curve

Correct AnswerverifiedShow Answer

If a firm experiences constant returns to scale at all output levels, then its long-run average total cost curve would

Correct AnswerverifiedShow Answer

The minimum points of the average variable cost and average total cost curves occur where the

Correct AnswerverifiedShow Answer

If Kevin's children run a lemonade stand for a day and sell 200 glasses of lemonade at $0.50 each, their total revenues are

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Average total cost reveals how much total cost will change as the firm alters its level of production.

Correct AnswerverifiedShow Answer

Which field of economics studies how the number of firms affects the prices in a market and the efficiency of market outcomes?

Correct AnswerverifiedShow Answer

The field of industrial organization addresses how the number of firms affects prices in a market and the efficiency of the market outcome.

Correct AnswerverifiedShow Answer

Consider the following information about baseball production at Bobby's Baseball Factory: Bobby pays all his workers the same wage, and labor is his only variable cost. From this information we can conclude that Bobby's average variable cost decreases

Correct AnswerverifiedShow Answer

Table 13-11 -Refer to Table 13-11. What is the marginal cost of producing the 1st poster?

Correct AnswerverifiedShow Answer

Table 13-7 The Flying Elvis Copter Rides -Refer to Table 13-7. What is the value of C?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedMC = change in TC/change in Q, so althou...View AnswerShow Answer

Figure 13-5 -Refer to Figure 13-5. Curve D is increasing because

Correct AnswerverifiedShow Answer

Figure 13-6 -Refer to Figure 13-6. Why doesn't the total cost curve begin at the origin (the point 0,0) ?

Correct AnswerverifiedShow Answer

Figure 13-7 -Refer to Figure 13-7. Which of the figures represents the production function for a typical firm?

Correct AnswerverifiedShow Answer

Variable cost divided by quantity produced is

Correct AnswerverifiedShow Answer

Average total cost (ATC) is calculated as follows:

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
MC = change in TC/change in Q, so althou...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified