Question 1

Which of the following statements about a production function is correct for a firm that uses labor to produce output?

Accepted Answer

A)   The production function depicts the relationship between the quantity of labor and the quantity of output.
B)   The slope of the production function measures marginal product.
C)   The slopes of the production function and the total cost curve are inversely related; if one is increasing, the other is decreasing.
D)   All of the above are correct.E) B) and D)
F) A) and C)

Question 2

For a typical firm,fixed costs increase in direct proportion to the increases in output.

Accepted Answer

A) True 
 B)False

Question 3

Figure 13-6
 
-Refer to Figure 13-6.Which of the following can be inferred from the figure above?
(i) Marginal cost is increasing at all levels of output.
(ii) Marginal product is increasing at low levels of output.
(iii) Marginal product is decreasing at high levels of output.

Accepted Answer

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

Question 4

Figure 13-9
The figure below depicts average total cost functions for a firm that produces automobiles.
 
-Refer to Figure 13-9.The firm experiences economies of scale at which output levels?

Accepted Answer

A)   output levels less than M
B)   output levels between M and N
C)   output levels greater than N
D)   All of the above are correct as long as the firm is operating in the long run.E) None of the above
F) All of the above

Question 5

Table 13-9
 
-Refer to Table 13-9.The average fixed cost of producing 5 posters is

Accepted Answer

A)   $1.00.
B)   $2.00.
C)   $3.00.
D)   $5.00.E) A) and B)
F) A) and C)

Question 6

Which of the following expressions is correct?

Accepted Answer

A)   accounting profit = economic profit + implicit costs
B)   accounting profit = total revenue - implicit costs
C)   economic profit = accounting profit + explicit costs
D)   economic profit = total revenue - implicit costsE) C) and D)
F) B) and D)

Question 7

Scenario 13-1
Calvin wants to start his own business making candles. He can purchase a candle factory that costs $400,000. Calvin currently has $500,000 in the bank earning 3 percent interest per year.
-Refer to Scenario 13-1.If Calvin purchases the factory with his own money,what is the annual implicit opportunity cost of purchasing the factory?

Accepted Answer

A)   $0
B)   $3,000
C)   $12,000
D)   $15,000E) C) and D)
F) B) and C)

Question 8

How long does it take a firm to go from the short run to the long run?

Accepted Answer

A)   six months
B)   one year
C)   two years
D)   It depends on the nature of the firm.E) B) and D)
F) None of the above

Question 9

Zach has decided to start his own photography studio.To purchase the necessary equipment,Zach withdrew $10,000 from his savings account,which was earning 3% interest,and borrowed an additional $5,000 from the bank at an interest rate of 8%.What is Zach's annual opportunity cost of the financial capital that has been invested in the business?

Accepted Answer

A)   $300
B)   $400
C)   $700
D)   $1,650E) A) and C)
F) B) and C)

Question 10

If Darren sells 300 glasses of iced tea at $0.50 each,his total revenues are

Accepted Answer

A)   $150.
B)   $299.50.
C)   $300.
D)   $600.E) A) and D)
F) A) and B)

Question 11

Grace is a self-employed artist.She can make 20 pieces of pottery per week.She is considering hiring her sister Kate to work for her.Both she and Kate can make 35 pieces of pottery per week.What is Kate's marginal product?

Accepted Answer

A)   55 pieces of pottery
B)   35 pieces of pottery
C)   22.5 pieces of pottery
D)   15 pieces of potteryE) A) and B)
F) A) and C)

Question 12

The average-fixed-cost curve

Accepted Answer

A)   is constant.
B)   is always decreasing.
C)   intersects marginal cost at the minimum of average fixed cost.
D)   intersects marginal cost at the minimum of marginal cost.E) A) and C)
F) A) and B)

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

The firm's efficient scale is the quantity of output that minimizes

Accepted Answer

A)   average total cost.
B)   average fixed cost.
C)   average variable cost.
D)   marginal cost.E) B) and D)
F) A) and C)

Question 15

Table 13-11
Teacher's Helper is a small company that has a subcontract to produce instructional materials for disabled children in public school districts. The owner rents several small rooms in an office building in the suburbs for $600 a month and has leased computer equipment that costs $480 a month.
 
-Refer to Table 13-11.How many instructional modules are produced when marginal cost is $1,300?

Accepted Answer

A)   4
B)   5
C)   7
D)   8E) None of the above
F) A) and C)

Question 16

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

Question 17

On a 100-acre farm,a farmer is able to produce 3,000 bushels of wheat when he hires 2 workers.He is able to produce 4,400 bushels of wheat when he hires 3 workers.Which of the following possibilities is consistent with the property of diminishing marginal product?

Accepted Answer

A)   The farmer is able to produce 5,600 bushels of wheat when he hires 4 workers.
B)   The farmer is able to produce 5,800 bushels of wheat when he hires 4 workers.
C)   The farmer is able to produce 6,000 bushels of wheat when he hires 4 workers.
D)   Any of the above could be correct.E) None of the above
F) A) and B)

Question 18

Scenario 13-10
Walter builds birdhouses. He spends $5 on the materials for each birdhouse. He can build one in 30 minutes. He is semi-retired but earns $8 per hour at the local hardware store. He can sell a birdhouse for $20 each.
-Refer to Scenario 13-10.An accountant would calculate the total cost for one birdhouse to be

Accepted Answer

A)   $5.
B)   $8.
C)   $9.
D)   $13.E) B) and D)
F) A) and B)

Question 19

Tom quit his $65,000 a year corporate lawyer job to open up his own law practice.In Tom's first year in business his total revenue equaled $150,000.Tom's explicit cost during the year totaled $85,000.What is Tom's economic profit for his first year in business?

Accepted Answer

A)   $0
B)   $20,000
C)   $65,000
D)   $85,000E) None of the above
F) A) and C)

Question 20

Scenario 13-13
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 13-13.Joan's production function exhibits

Accepted Answer

A)   increasing marginal product.
B)   decreasing marginal product.
C)   constant marginal product.
D)   Any of the above could be correct.E) C) and D)
F) B) and C)

Exam 13: The Costs of Production.

Correct Answer
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Table 13-9 -Refer to Table 13-9.The average fixed cost of producing 5 posters is

Correct Answer
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Which of the following statements about a production function is correct for a firm that uses labor to produce output?

Correct Answer
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The average-fixed-cost curve

Correct Answer
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On a 100-acre farm,a farmer is able to produce 3,000 bushels of wheat when he hires 2 workers.He is able to produce 4,400 bushels of wheat when he hires 3 workers.Which of the following possibilities is consistent with the property of diminishing marginal product?

Correct Answer
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How long does it take a firm to go from the short run to the long run?

Correct Answer
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If Darren sells 300 glasses of iced tea at $0.50 each,his total revenues are

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

Correct Answer
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Which of the following statements is correct?

Correct Answer
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The firm's efficient scale is the quantity of output that minimizes

Correct Answer
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Correct Answer
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For a typical firm,fixed costs increase in direct proportion to the increases in output.

Correct Answer
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Grace is a self-employed artist.She can make 20 pieces of pottery per week.She is considering hiring her sister Kate to work for her.Both she and Kate can make 35 pieces of pottery per week.What is Kate's marginal product?

Correct Answer
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Figure 13-6 -Refer to Figure 13-6.Which of the following can be inferred from the figure above? (i) Marginal cost is increasing at all levels of output. (ii) Marginal product is increasing at low levels of output. (iii) Marginal product is decreasing at high levels of output.

Correct Answer
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Tom quit his $65,000 a year corporate lawyer job to open up his own law practice.In Tom's first year in business his total revenue equaled $150,000.Tom's explicit cost during the year totaled $85,000.What is Tom's economic profit for his first year in business?

Correct Answer
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Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9.The firm experiences economies of scale at which output levels?

Correct Answer
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Which of the following expressions is correct?

Correct Answer
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Exam 13: The Costs of Production.

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Table 13-9 -Refer to Table 13-9.The average fixed cost of producing 5 posters is

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Which of the following statements about a production function is correct for a firm that uses labor to produce output?

Correct AnswerverifiedShow Answer

The average-fixed-cost curve

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On a 100-acre farm,a farmer is able to produce 3,000 bushels of wheat when he hires 2 workers.He is able to produce 4,400 bushels of wheat when he hires 3 workers.Which of the following possibilities is consistent with the property of diminishing marginal product?

Correct AnswerverifiedShow Answer

How long does it take a firm to go from the short run to the long run?

Correct AnswerverifiedShow Answer

If Darren sells 300 glasses of iced tea at $0.50 each,his total revenues are

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

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Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

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The firm's efficient scale is the quantity of output that minimizes

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

For a typical firm,fixed costs increase in direct proportion to the increases in output.

Correct AnswerverifiedShow Answer

Grace is a self-employed artist.She can make 20 pieces of pottery per week.She is considering hiring her sister Kate to work for her.Both she and Kate can make 35 pieces of pottery per week.What is Kate's marginal product?

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Figure 13-6 -Refer to Figure 13-6.Which of the following can be inferred from the figure above? (i) Marginal cost is increasing at all levels of output. (ii) Marginal product is increasing at low levels of output. (iii) Marginal product is decreasing at high levels of output.

Correct AnswerverifiedShow Answer

Tom quit his $65,000 a year corporate lawyer job to open up his own law practice.In Tom's first year in business his total revenue equaled $150,000.Tom's explicit cost during the year totaled $85,000.What is Tom's economic profit for his first year in business?

Correct AnswerverifiedShow Answer

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9.The firm experiences economies of scale at which output levels?

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Which of the following expressions is correct?

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