Question 1

The mass affordability of the iPhone is the result of the following, except

Accepted Answer

A)  mass production and spreading of fixed costs.
B)  the law of diminishing returns in manufacturing.
C)  economies of scale and large volumes.
D)  mass sales and distribution cost savings.E) B) and C)
F) All of the above

Question 2

Over the range of output where the slope of the short-run total cost curve becomes steeper,

Accepted Answer

A)  fixed costs are increasing.
B)  marginal cost is increasing.
C)  marginal cost is positive but decreasing.
D)  marginal cost is lower than average variable cost.E) B) and C)
F) C) and D)

Question 3

Chris is preparing for a comprehensive course exam by reading a textbook with chapters of equal length and difficulty.The number of chapters she can comprehend and master when studying is: (1)  hour one, 1.5 chapters; (2)  hour two, 2.0 chapters; (3)  hour three, 1.5 chapters; (4)  hour four, 1 chapter; (5)  hour five, 0 chapters.Diminishing marginal returns to studying sets in for
Chris after hour

Accepted Answer

A)  one.
B)  two.
C)  four.
D)  five.E) B) and D)
F) B) and C)

Question 4

Which of the following is not a source of economies of scale?

Accepted Answer

A)  learning-by-doing
B)  labor specialization
C)  use of larger machines
D)  inelastic resource supply curvesE) A) and B)
F) A) and D)

Question 5

In the short run, which of the following statements is correct?

Accepted Answer

A)  The marginal cost curve intersects the average variable and average fixed cost curves at their minimum points.
B)  Average variable cost declines continuously as total output is expanded.
C)  Total cost will exceed variable cost.
D)  If the inputs of all resources are increased by equal amounts, total output will expand by diminishing amounts.E) B) and C)
F) A) and D)

Question 6

If a more efficient technology was discovered by a firm, there would be

Accepted Answer

A)  an upward shift in the AVC curve.
B)  an upward shift in the AFC curve.
C)  a downward shift in the AFC curve.
D)  a downward shift in the MC curve.E) A) and B)
F) All of the above

Question 7

Which of the following statements is false?

Accepted Answer

A)  The short run refers to a period of less than one year.
B)  In the long run, all inputs can vary in quantity.
C)  Firms may continue operating at a loss in the short run.
D)  In the long run, firms would not continue operating at a loss.E) C) and D)
F) A) and B)

Question 8

If marginal cost is

Accepted Answer

A)  falling, then average total cost must also be falling.
B)  rising, then average total cost must also be rising.
C)  rising, then average total cost could be either falling or rising.
D)  falling, then average total cost could be either falling or rising.E) A) and B)
F) None of the above

Question 9

Many people have turned to the Internet to get the news.This has caused the circulation numbers of newspapers to fall drastically, which in turn caused their

Accepted Answer

A)  average fixed costs to increase.
B)  average total costs to decrease.
C)  average fixed costs to decrease.
D)  marginal costs to increase.E) A) and B)
F) A) and C)

Question 10

Which of the following best expresses the law of diminishing returns?

Accepted Answer

A)  Because large-scale production allows the realization of economies of scale, the real costs of production vary directly with the level of output.
B)  Population growth automatically adjusts to that level at which the average product per worker will be at a maximum.
C)  As successive amounts of one resource (labor)  are added to fixed amounts of other resources (capital) , beyond some point the resulting extra or marginal output will decline.
D)  Proportionate increases in the inputs of all resources will result in a less-than-proportionate increase in total output.E) B) and D)
F) None of the above

Question 11

Total fixed costs of production in the short run

Accepted Answer

A)  cannot be reduced by producing less output.
B)  can be reduced by producing more output.
C)  are small in comparison to variable costs.
D)  increase as the firm produces more output.E) None of the above
F) A) and B)

Question 12

(Last Word)  Which of the following is predicted to deliver a Third Industrial Revolution characterized by low production and transportation costs?

Accepted Answer

A)  new technology in additive manufacturing
B)  new technology in energy production involving fusion reactors
C)  significant decreases in petroleum prices with the discovery of new oil fields and new extraction techniques
D)  new transportation technology involving antigravitational fieldsE) A) and D)
F) A) and C)

Question 13

Economic cost can best be defined as

Accepted Answer

A)  any contractual obligation that results in a flow of money expenditures from an enterprise to resource suppliers.
B)  any contractual obligation to labor or material suppliers.
C)  a payment that must be made to obtain and retain the services of a resource.
D)  all costs exclusive of payments to fixed factors of production.E) C) and D)
F) None of the above

Question 14

When diminishing marginal returns starts occurring, the addition of successive units of a variable resource to a fixed resource will cause the firm's production to diminish.

Accepted Answer

A) True 
 B)False

Question 15

If there are 10 plants producing the total domestic consumption of a product and each plant is operating at minimum efficient scale, then each plant accounts for what percentage of domestic consumption?

Accepted Answer

A)  5 percent
B)  10 percent
C)  20 percent
D)  25 percentE) B) and D)
F) B) and C)

Question 16

Assume that in the short run a firm is producing 100 units of output, has average total costs of $200, and has average variable costs of $150.The firm's total fixed costs are

Accepted Answer

A)  $5,000.
B)  $500.
C)  $0.50.
D)  $50.E) C) and D)
F) A) and C)

Question 17

The following is cost information for the Creamy Crisp Donut Company.Entrepreneur's potential earnings as a salaried worker = $50,000 Annual lease on building = $22,000 Annual revenue from operations = $380,000 Payments to workers = $120,000
Utilities (electricity, water, disposal)  costs = $8,000
Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000 Entrepreneur's
Forgone interest on personal funds used to finance the business = $6,000
Creamy Crisp

Accepted Answer

A)  has lower implicit costs, including a normal profit, than its explicit costs.
B)  is earning a normal profit but not an economic profit.
C)  is earning an economic profit.
D)  is suffering an economic loss, when implicit costs are considered.E) All of the above
F) C) and D)

Question 18

Which of the following holds true?

Accepted Answer

A)  There is no relationship between AP and AVC.
B)  When MP is rising, AVC is falling, and when MP is falling, AVC is rising.
C)  When AP is rising, AVC is falling, and when AP is falling, AVC is rising.
D)  When AP is rising, AVC is rising, and when AP is falling, AVC is falling.E) A) and B)
F) A) and C)

Question 19

Accounting profits are typically

Accepted Answer

A)  greater than economic profits because the former do not take explicit costs into account.
B)  equal to economic profits because accounting costs include all opportunity costs.
C)  smaller than economic profits because the former do not take implicit costs into account.
D)  greater than economic profits because the former do not take implicit costs into account.E) B) and C)
F) A) and D)

Question 20

Variable costs are costs that change directly with output.

Accepted Answer

A) True 
 B)False

Exam 9: Businesses and the Costs of Production

Total fixed costs of production in the short run

Correct Answer
verified

If there are 10 plants producing the total domestic consumption of a product and each plant is operating at minimum efficient scale, then each plant accounts for what percentage of domestic consumption?

Correct Answer
verified

Which of the following best expresses the law of diminishing returns?

Correct Answer
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Assume that in the short run a firm is producing 100 units of output, has average total costs of $200, and has average variable costs of $150.The firm's total fixed costs are

Correct Answer
verified

Which of the following holds true?

Correct Answer
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Many people have turned to the Internet to get the news.This has caused the circulation numbers of newspapers to fall drastically, which in turn caused their

Correct Answer
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If marginal cost is

Correct Answer
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If a more efficient technology was discovered by a firm, there would be

Correct Answer
verified

Accounting profits are typically

Correct Answer
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Which of the following statements is false?

Correct Answer
verified

Economic cost can best be defined as

Correct Answer
verified

(Last Word) Which of the following is predicted to deliver a Third Industrial Revolution characterized by low production and transportation costs?

Correct Answer
verified

The mass affordability of the iPhone is the result of the following, except

Correct Answer
verified

Correct Answer
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Correct Answer
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Over the range of output where the slope of the short-run total cost curve becomes steeper,

Correct Answer
verified

In the short run, which of the following statements is correct?

Correct Answer
verified

Variable costs are costs that change directly with output.

Correct Answer
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Which of the following is not a source of economies of scale?

Correct Answer
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When diminishing marginal returns starts occurring, the addition of successive units of a variable resource to a fixed resource will cause the firm's production to diminish.

Correct Answer
verified

Exam 9: Businesses and the Costs of Production

Total fixed costs of production in the short run

Correct AnswerverifiedShow Answer

If there are 10 plants producing the total domestic consumption of a product and each plant is operating at minimum efficient scale, then each plant accounts for what percentage of domestic consumption?

Correct AnswerverifiedShow Answer

Which of the following best expresses the law of diminishing returns?

Correct AnswerverifiedShow Answer

Assume that in the short run a firm is producing 100 units of output, has average total costs of $200, and has average variable costs of $150.The firm's total fixed costs are

Correct AnswerverifiedShow Answer

Which of the following holds true?

Correct AnswerverifiedShow Answer

Many people have turned to the Internet to get the news.This has caused the circulation numbers of newspapers to fall drastically, which in turn caused their

Correct AnswerverifiedShow Answer

If marginal cost is

Correct AnswerverifiedShow Answer

If a more efficient technology was discovered by a firm, there would be

Correct AnswerverifiedShow Answer

Accounting profits are typically

Correct AnswerverifiedShow Answer

Which of the following statements is false?

Correct AnswerverifiedShow Answer

Economic cost can best be defined as

Correct AnswerverifiedShow Answer

(Last Word) Which of the following is predicted to deliver a Third Industrial Revolution characterized by low production and transportation costs?

Correct AnswerverifiedShow Answer

The mass affordability of the iPhone is the result of the following, except

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Over the range of output where the slope of the short-run total cost curve becomes steeper,

Correct AnswerverifiedShow Answer

In the short run, which of the following statements is correct?

Correct AnswerverifiedShow Answer

Variable costs are costs that change directly with output.

Correct AnswerverifiedShow Answer

Which of the following is not a source of economies of scale?

Correct AnswerverifiedShow Answer

When diminishing marginal returns starts occurring, the addition of successive units of a variable resource to a fixed resource will cause the firm's production to diminish.

Correct AnswerverifiedShow Answer

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