Question 1

Scenario 13-8
Wanda owns a lemonade stand. She produces lemonade using five inputs: water, sugar, lemons, paper cups, and labor. Her costs per glass are as follows: $0.01 for water, $0.02 for sugar, $0.03 for lemons, $0.02 for cups, and $0.10 for the opportunity cost of her labor. She can sell 300 glasses for $0.50 each.
-Refer to Scenario 13-8. What are Wanda's total economic costs per glass?

Accepted Answer

A)   $0.18
B)   $0.10
C)   $0.08
D)   $0.02E) C) and D)
F) A) and C)

Question 2

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 total opportunity cost of capital is

Accepted Answer

A)   $2,000.
B)   $4,000.
C)   $12,000.
D)   $14,000.E) None of the above
F) A) and B)

Question 3

The marginal-cost curve intersects the average-fixed-cost curve at the minimum of marginal cost.

Accepted Answer

A) True 
 B)False

Question 4

Suppose a firm currently produces 325 units of output per day with 15 workers. The firm is able to produce 340 units of output with a 16th worker. What is the marginal product of the 16th worker?

Accepted Answer

A)   10 units of output
B)   15 units of output
C)   16 units of output
D)   25 units of outputE) C) and D)
F) All of the above

Question 5

Figure 13-1 
-Refer to Figure 13-1. Suppose the production function shifts from TP2 to TP1. Such a shift in the total product curve is most likely due to a decrease in the firm's

Accepted Answer

A)   costs of production.
B)   product price.
C)   market share.
D)   productivity.E) A) and D)
F) B) and C)

Question 6

When a firm experiences diseconomies of scale,

Accepted Answer

A)   short-run average total cost is minimized.
B)   long-run average total cost is minimized.
C)   long-run average total cost increases as output increases.
D)   long-run average total cost decreases as output increases.E) C) and D)
F) None of the above

Question 7

The fact that many inputs are fixed in the short run but variable in the long run has little impact on the firm's cost curves.

Accepted Answer

A) True 
 B)False

Question 8

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 9

How would a production function that exhibits decreasing marginal product affect the shape of the total cost curve?
Explain or draw a graph.

Accepted Answer

The total cost curve will incr...

Question 10

Table 13-1 
-Refer to Table 13-1. What is total output when 5 workers are hired?

Accepted Answer

A)   -10
B)   90
C)   185
D)   225E) A) and C)
F) All of the above

Question 11

In the long run a company that produces and sells kayaks incurs total costs of $15,000 when output is 30 kayaks and $20,000 when output is 40 kayaks. The kayak company exhibits

Accepted Answer

A)   diseconomies of scale because total cost is rising as output rises.
B)   constant returns to scale because average total cost is constant as output rises.
C)   diseconomies of scale because average total cost is rising as output rises.
D)   economies of scale because average total cost is falling as output rises.E) B) and C)
F) A) and D)

Question 12

The nature of a firm's cost (fixed or variable)  depends on the

Accepted Answer

A)   firm's revenues.
B)   time horizon under consideration.
C)   price the firm charges for output.
D)   explicit but not implicit costs.E) C) and D)
F) None of the above

Question 13

Scenario 13-3
Kachina is a senior majoring in graphic design at Awesome University (AU) . While she has been attending college, Kachina started a computer consulting business to help senior citizens learn how to use their iPads. Kachina charges $25 per hour for her consulting services. She also works 5 hours a week for the Economics Department to maintain that department's Web page. The Economics Department pays Kachina $20 per hour.
-Refer to Scenario 13-3. If Kachina can work additional hours at either job, what is the opportunity cost if she spends one hour reading a novel?

Accepted Answer

A)   $20
B)   $25
C)   $100
D)   $125E) B) and C)
F) A) and D)

Question 14

When average total cost is above marginal cost, average total cost is rising.

Accepted Answer

A) True 
 B)False

Question 15

Scenario 13-15
Joan grows pumpkins. If Joan plants no seeds on her farm, she gets no harvest. If she plants 1 bag of seeds, she gets 500 pumpkins. If she plants 2 bags, she gets 800 pumpkins. If she plants 3 bags, she gets 900 pumpkins. A bag of seeds costs $100, and seeds are her only cost.
-Refer to Scenario 13-15. Joan's total­cost curve is

Accepted Answer

A)   increasing at an increasing rate.
B)   increasing at a decreasing rate.
C)   increasing at a constant rate.
D)   decreasing.E) A) and B)
F) All of the above

Question 16

Average variable cost is equal to total variable cost divided by quantity of output.

Accepted Answer

A) True 
 B)False

Question 17

If a firm uses labor to produce output, the firm's production function depicts the relationship between

Accepted Answer

A)   the number of workers and the quantity of output.
B)   marginal product and marginal cost.
C)   the maximum quantity that the firm can produce as it adds more capital to a fixed quantity of labor.
D)   fixed inputs and variable inputs in the short run.E) None of the above
F) All of the above

Question 18

Table 13-6
Wooden Chair Factory 
-Refer to Table 13-6. Assume the Wooden Chair Factory currently employs 5 workers. What is the marginal product of labor when the factory adds a 6th worker?

Accepted Answer

A)   5 chairs per hour
B)   15 chairs per hour
C)   25 chairs per hour
D)   70 chairs per hourE) C) and D)
F) A) and B)

Question 19

Katya owns a math-tutoring business. Her accountant most likely includes which of the following costs on her financial statements? tutoring business

Accepted Answer

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

Question 20

A difference between explicit and implicit costs is that

Accepted Answer

A)   explicit costs must be greater than implicit costs.
B)   explicit costs do not require a direct monetary outlay by the firm, whereas implicit costs do.
C)   implicit costs do not require a direct monetary outlay by the firm, whereas explicit costs do.
D)   implicit costs must be greater than explicit costs.E) None of the above
F) B) and C)

Exam 13: The Costs of Production

Correct Answer
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Suppose a firm currently produces 325 units of output per day with 15 workers. The firm is able to produce 340 units of output with a 16th worker. What is the marginal product of the 16th worker?

Correct Answer
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Table 13-6 Wooden Chair Factory -Refer to Table 13-6. Assume the Wooden Chair Factory currently employs 5 workers. What is the marginal product of labor when the factory adds a 6th worker?

Correct Answer
verified

The nature of a firm's cost (fixed or variable) depends on the

Correct Answer
verified

Correct Answer
verified

When average total cost is above marginal cost, average total cost is rising.

Correct Answer
verified

The marginal-cost curve intersects the average-fixed-cost curve at the minimum of marginal cost.

Correct Answer
verified

The fact that many inputs are fixed in the short run but variable in the long run has little impact on the firm's cost curves.

Correct Answer
verified

When a firm experiences diseconomies of scale,

Correct Answer
verified

Table 13-1 -Refer to Table 13-1. What is total output when 5 workers are hired?

Correct Answer
verified

A difference between explicit and implicit costs is that

Correct Answer
verified

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

Correct Answer
verified

In the long run a company that produces and sells kayaks incurs total costs of $15,000 when output is 30 kayaks and $20,000 when output is 40 kayaks. The kayak company exhibits

Correct Answer
verified

Correct Answer
verified

Katya owns a math-tutoring business. Her accountant most likely includes which of the following costs on her financial statements? tutoring business

Correct Answer
verified

Average variable cost is equal to total variable cost divided by quantity of output.

Correct Answer
verified

If a firm uses labor to produce output, the firm's production function depicts the relationship between

Correct Answer
verified

Correct Answer
verified

How would a production function that exhibits decreasing marginal product affect the shape of the total cost curve? Explain or draw a graph.

Correct Answer
verified
The total cost curve will incr...
View Answer

Figure 13-1 -Refer to Figure 13-1. Suppose the production function shifts from TP2 to TP1. Such a shift in the total product curve is most likely due to a decrease in the firm's

Correct Answer
verified

Exam 13: The Costs of Production

Correct AnswerverifiedShow Answer

Suppose a firm currently produces 325 units of output per day with 15 workers. The firm is able to produce 340 units of output with a 16th worker. What is the marginal product of the 16th worker?

Correct AnswerverifiedShow Answer

Table 13-6 Wooden Chair Factory -Refer to Table 13-6. Assume the Wooden Chair Factory currently employs 5 workers. What is the marginal product of labor when the factory adds a 6th worker?

Correct AnswerverifiedShow Answer

The nature of a firm's cost (fixed or variable) depends on the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When average total cost is above marginal cost, average total cost is rising.

Correct AnswerverifiedShow Answer

The marginal-cost curve intersects the average-fixed-cost curve at the minimum of marginal cost.

Correct AnswerverifiedShow Answer

The fact that many inputs are fixed in the short run but variable in the long run has little impact on the firm's cost curves.

Correct AnswerverifiedShow Answer

When a firm experiences diseconomies of scale,

Correct AnswerverifiedShow Answer

Table 13-1 -Refer to Table 13-1. What is total output when 5 workers are hired?

Correct AnswerverifiedShow Answer

A difference between explicit and implicit costs is that

Correct AnswerverifiedShow 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

In the long run a company that produces and sells kayaks incurs total costs of $15,000 when output is 30 kayaks and $20,000 when output is 40 kayaks. The kayak company exhibits

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Katya owns a math-tutoring business. Her accountant most likely includes which of the following costs on her financial statements? tutoring business

Correct AnswerverifiedShow Answer

Average variable cost is equal to total variable cost divided by quantity of output.

Correct AnswerverifiedShow Answer

If a firm uses labor to produce output, the firm's production function depicts the relationship between

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

How would a production function that exhibits decreasing marginal product affect the shape of the total cost curve? Explain or draw a graph.

Correct AnswerverifiedThe total cost curve will incr...View AnswerShow Answer

Figure 13-1 -Refer to Figure 13-1. Suppose the production function shifts from TP2 to TP1. Such a shift in the total product curve is most likely due to a decrease in the firm's

Correct AnswerverifiedShow Answer

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The total cost curve will incr...
View Answer

Correct Answer
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