Question 1

Figure 13-2 
-Refer to Figure 13-2. If the figure represented production at a cookie factory, the factory would be experiencing

Accepted Answer

A)   diminishing marginal product of workers.
B)   diminishing marginal cost of cookie production.
C)   decreasing cost of cookie production.
D)   decreasing output of cookies.E) A) and B)
F) A) and C)

Question 2

Economic profit is greater than or equal to accounting profit.

Accepted Answer

A) True 
 B)False

Question 3

When a firm experiences economies of scale, long-run average total cost falls as the quantity of output increases.

Accepted Answer

A) True 
 B)False

Question 4

Several related measures of cost can be derived from a firm's total cost.

Accepted Answer

A) True 
 B)False

Question 5

In the long run a company that produces and sells popcorn incurs total costs of $1,050 when output is 90 canisters and $1,200 when output is 120 canisters. The popcorn company exhibits

Accepted Answer

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

Question 6

Figure 13-10 
-Refer to Figure 13-10. The firm experiences constant returns to scale if it changes its level of output from

Accepted Answer

A)   Q1 to Q2.
B)   Q2 to Q4.
C)   Q1 to Q3.
D)   Q4 to Q5.E) All of the above
F) None of the above

Question 7

Table 13-17
Consider the following table of long-run total cost for four different firms: 
-Refer to Table 13-17. Which firm has diseconomies of scale over the entire range of output?

Accepted Answer

A)   Firm 1 only
B)   Firm 2 only
C)   Firms 1 and 2 only
D)   Firm 3 onlyE) All of the above
F) A) and C)

Question 8

Table 13-17
Consider the following table of long-run total cost for four different firms: 
-Refer to Table 13-17. Firm 4's efficient scale occurs at what quantity?

Accepted Answer

A)   2
B)   3
C)   4
D)   5E) B) and C)
F) C) and D)

Question 9

Diminishing marginal product exists when the production function becomes flatter as inputs increase.

Accepted Answer

A) True 
 B)False

Question 10

Table 13-4
Charles's Math Tutoring 
-Refer to Table 13-4. Suppose that Charles's math tutoring company has a fixed cost of $50 per month for his cell phone. Each worker costs Charles $60 per day. As output increases from 45 to 70 students, Charles's total cost curve

Accepted Answer

A)   increases but gets flatter.
B)   increases and gets steeper.
C)   decreases and gets flatter.
D)   decreases but gets steeper.E) A) and B)
F) C) and D)

Question 11

The average-total-cost curve is unaffected by diminishing marginal product.

Accepted Answer

A) True 
 B)False

Question 12

A local playground equipment company plans to operate out of its current factory, which is estimated to last 30 years. All cost decisions it makes during the 30-year period

Accepted Answer

A)   are long-run decisions.
B)   are short-run decisions.
C)   involve only maintenance of the factory.
D)   are zero because the cost decisions were made at the beginning of the business.E) A) and C)
F) C) and D)

Question 13

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 14

Billy's Bean Bag Emporium produced 300 bean bag chairs but sold only 275 of the units it produced. The average cost of production for each unit of output produced was $100. The price for each of the 275 units sold was $95. Total profit for Billy's Bean Bag Emporium would be

Accepted Answer

A)   -$3,875.
B)   $26,125.
C)   $28,500.
D)   $30,000.E) C) and D)
F) A) and B)

Question 15

In the long run, a factory is usually considered a fixed input.

Accepted Answer

A) True 
 B)False

Question 16

Scenario 13-1
Korie wants to start her own business making custom furniture. She can purchase a factory that costs $400,000. Korie currently has $500,000 in the bank earning 3 percent interest per year.
-Refer to Scenario 13-1. If Korie purchases the factory with her 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 17

Describe the general shape of the average-fixed-cost curve.

Accepted Answer

AFC = FC/Q. Fixed cost is unch...

Question 18

When a firm's only variable input is labor, then the slope of the production function measures the

Accepted Answer

A)   quantity of labor.
B)   quantity of output.
C)   total cost.
D)   marginal product of labor.E) B) and D)
F) B) and C)

Question 19

Suppose that Danita owns a cupcake bakery. In the short run, at least one of her inputs is fixed. Provide one or two examples of the types of inputs that could be fixed in the short run.

Accepted Answer

Danita's store size is likely to be fixe...

Question 20

When adding another unit of labor leads to an increase in output that is smaller than the increases in output that resulted from adding previous units of labor, the firm is experiencing

Accepted Answer

A)   diminishing labor.
B)   diminishing output.
C)   diminishing marginal product.
D)   negative marginal product.E) B) and C)
F) None of the above

Exam 13: The Costs of Production

Diminishing marginal product exists when the production function becomes flatter as inputs increase.

Correct Answer
verified

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

Correct Answer
verified

Describe the general shape of the average-fixed-cost curve.

Correct Answer
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AFC = FC/Q. Fixed cost is unch...
View Answer

Correct Answer
verified

Table 13-17 Consider the following table of long-run total cost for four different firms: -Refer to Table 13-17. Which firm has diseconomies of scale over the entire range of output?

Correct Answer
verified

Economic profit is greater than or equal to accounting profit.

Correct Answer
verified

In the long run a company that produces and sells popcorn incurs total costs of $1,050 when output is 90 canisters and $1,200 when output is 120 canisters. The popcorn company exhibits

Correct Answer
verified

Figure 13-10 -Refer to Figure 13-10. The firm experiences constant returns to scale if it changes its level of output from

Correct Answer
verified

In the long run, a factory is usually considered a fixed input.

Correct Answer
verified

Billy's Bean Bag Emporium produced 300 bean bag chairs but sold only 275 of the units it produced. The average cost of production for each unit of output produced was $100. The price for each of the 275 units sold was $95. Total profit for Billy's Bean Bag Emporium would be

Correct Answer
verified

Table 13-4 Charles's Math Tutoring -Refer to Table 13-4. Suppose that Charles's math tutoring company has a fixed cost of $50 per month for his cell phone. Each worker costs Charles $60 per day. As output increases from 45 to 70 students, Charles's total cost curve

Correct Answer
verified

When a firm's only variable input is labor, then the slope of the production function measures the

Correct Answer
verified

A local playground equipment company plans to operate out of its current factory, which is estimated to last 30 years. All cost decisions it makes during the 30-year period

Correct Answer
verified

The average-total-cost curve is unaffected by diminishing marginal product.

Correct Answer
verified

Table 13-17 Consider the following table of long-run total cost for four different firms: -Refer to Table 13-17. Firm 4's efficient scale occurs at what quantity?

Correct Answer
verified

When a firm experiences economies of scale, long-run average total cost falls as the quantity of output increases.

Correct Answer
verified

Figure 13-2 -Refer to Figure 13-2. If the figure represented production at a cookie factory, the factory would be experiencing

Correct Answer
verified

Suppose that Danita owns a cupcake bakery. In the short run, at least one of her inputs is fixed. Provide one or two examples of the types of inputs that could be fixed in the short run.

Correct Answer
verified
Danita's store size is likely to be fixe...
View Answer

Several related measures of cost can be derived from a firm's total cost.

Correct Answer
verified

When adding another unit of labor leads to an increase in output that is smaller than the increases in output that resulted from adding previous units of labor, the firm is experiencing

Correct Answer
verified

Exam 13: The Costs of Production

Diminishing marginal product exists when the production function becomes flatter as inputs increase.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Describe the general shape of the average-fixed-cost curve.

Correct AnswerverifiedAFC = FC/Q. Fixed cost is unch...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Table 13-17 Consider the following table of long-run total cost for four different firms: -Refer to Table 13-17. Which firm has diseconomies of scale over the entire range of output?

Correct AnswerverifiedShow Answer

Economic profit is greater than or equal to accounting profit.

Correct AnswerverifiedShow Answer

In the long run a company that produces and sells popcorn incurs total costs of $1,050 when output is 90 canisters and $1,200 when output is 120 canisters. The popcorn company exhibits

Correct AnswerverifiedShow Answer

Figure 13-10 -Refer to Figure 13-10. The firm experiences constant returns to scale if it changes its level of output from

Correct AnswerverifiedShow Answer

In the long run, a factory is usually considered a fixed input.

Correct AnswerverifiedShow Answer

Billy's Bean Bag Emporium produced 300 bean bag chairs but sold only 275 of the units it produced. The average cost of production for each unit of output produced was $100. The price for each of the 275 units sold was $95. Total profit for Billy's Bean Bag Emporium would be

Correct AnswerverifiedShow Answer

Table 13-4 Charles's Math Tutoring -Refer to Table 13-4. Suppose that Charles's math tutoring company has a fixed cost of $50 per month for his cell phone. Each worker costs Charles $60 per day. As output increases from 45 to 70 students, Charles's total cost curve

Correct AnswerverifiedShow Answer

When a firm's only variable input is labor, then the slope of the production function measures the

Correct AnswerverifiedShow Answer

A local playground equipment company plans to operate out of its current factory, which is estimated to last 30 years. All cost decisions it makes during the 30-year period

Correct AnswerverifiedShow Answer

The average-total-cost curve is unaffected by diminishing marginal product.

Correct AnswerverifiedShow Answer

Table 13-17 Consider the following table of long-run total cost for four different firms: -Refer to Table 13-17. Firm 4's efficient scale occurs at what quantity?

Correct AnswerverifiedShow Answer

When a firm experiences economies of scale, long-run average total cost falls as the quantity of output increases.

Correct AnswerverifiedShow Answer

Figure 13-2 -Refer to Figure 13-2. If the figure represented production at a cookie factory, the factory would be experiencing

Correct AnswerverifiedShow Answer

Suppose that Danita owns a cupcake bakery. In the short run, at least one of her inputs is fixed. Provide one or two examples of the types of inputs that could be fixed in the short run.

Correct AnswerverifiedDanita's store size is likely to be fixe...View AnswerShow Answer

Several related measures of cost can be derived from a firm's total cost.

Correct AnswerverifiedShow Answer

When adding another unit of labor leads to an increase in output that is smaller than the increases in output that resulted from adding previous units of labor, the firm is experiencing

Correct AnswerverifiedShow Answer

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AFC = FC/Q. Fixed cost is unch...
View Answer

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Danita's store size is likely to be fixe...
View Answer

Correct Answer
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Correct Answer
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