Question 1

Pete owns a shoe-shine business.His accountant most likely includes which of the following costs on his financial statements?
(i) shoe polish
(ii) rent on the shoe stand
(iii) wages Pete could earn delivering newspapers
(iv) interest that Pete's money was earning before he spent his savings to set up the shoe-shine business

Accepted Answer

A)   (i)  only
B)   (i)  and (ii)  only
C)   (iii)  and (iv)  only
D)   (i) , (ii) , (iii) , and (iv) E) A) and B)
F) C) and D)

Question 2

Which of the following factors is most likely to shift IBM's total cost and marginal cost curves downward?

Accepted Answer

A)   a technological advance resulting in increased productivity
B)   higher property taxes charged by the municipal government
C)   increased wages to attract additional computer operators
D)   a reduction in subsidies from the state governmentE) None of the above
F) B) and C)

Question 3

Which of the following measures of cost is best described as "the cost of a typical unit of output if total cost is divided evenly over all the units produced?"

Accepted Answer

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

Question 4

Scenario 13-15
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 13-15.Farmer Jack's production function will

Accepted Answer

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

Question 5

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

Accepted Answer

A)   $50
B)   $140
C)   $360
D)   $410E) A) and B)
F) None of the above

Question 6

In his book,An Inquiry into the Nature and Causes of the Wealth of Nations,Adam Smith credits economies of scale to

Accepted Answer

A)   competition.
B)   opportunity costs.
C)   specialization.
D)   incentives.E) A) and B)
F) All of the above

Question 7

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

Accepted Answer

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

Question 8

When a factory is operating in the short run,

Accepted Answer

A)   it cannot alter variable costs.
B)   total cost and variable cost are usually the same.
C)   average fixed cost rises as output increases.
D)   it cannot adjust the quantity of fixed inputs.E) B) and C)
F) All of the above

Question 9

Table 13-1
 
-Refer to Table 13-1.What is total output when 4 workers are hired?

Accepted Answer

A)   -10
B)   70
C)   120
D)   160E) None of the above
F) B) and C)

Question 10

If marginal cost is equal to average total cost,then

Accepted Answer

A)   marginal cost is minimized.
B)   average total cost is minimized.
C)   average variable cost is minimized.
D)   marginal cost is zero.E) C) and D)
F) A) and B)

Question 11

Table 13-9
 
-Refer to Table 13-9.What is the marginal cost of producing the 1st poster?

Accepted Answer

A)   $1.00
B)   $10.00
C)   $11.00
D)   It can't be determined from the information given.E) B) and D)
F) C) and D)

Question 12

Table 13-12
Betty's Bakery
 
-Refer to Table 13-12.What is the average total cost of producing 2 cakes at Betty's Bakery?

Accepted Answer

A)   $14.00
B)   $18.50
C)   $22.50
D)   $26.50E) All of the above
F) None of the above

Question 13

For a large firm that produces and sells automobiles,which of the following costs would be a variable cost?

Accepted Answer

A)   the unemployment insurance premium that the firm pays to the state of Missouri that is calculated based on the number of worker-hours that the firm uses
B)   the cost of the steel that is used in producing automobiles
C)   the cost of the electricity of running the machines on the factory floor
D)   All of the above are correct.E) All of the above
F) C) and D)

Question 14

At what level of output will average variable cost equal average total cost?

Accepted Answer

A)   when marginal cost equals average total cost
B)   for all levels of output in which average variable cost is falling
C)   when marginal cost equals average variable cost
D)   There is no level of output where this occurs, as long as fixed costs are positive.E) A) and B)
F) All of the above

Question 15

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 constant returns to 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) C) and D)
F) B) and D)

Question 16

The Wacky Widget company has total fixed costs of $100,000 per year.The firm's average variable cost is $5 for 10,000 widgets.At that level of output,the firm's average total costs equal

Accepted Answer

A)   $10
B)   $15
C)   $100
D)   $150E) All of the above
F) None of the above

Question 17

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

Question 18

When marginal cost is greater than average cost,average cost is

Accepted Answer

A)   rising.
B)   falling.
C)   constant.
D)   The direction of change in average cost cannot be determined from this information.E) A) and B)
F) A) and C)

Question 19

Analyzing the behavior of the firm enhances our understanding of

Accepted Answer

A)   what decisions lie behind the market supply curve.
B)   how consumers allocate their income to purchase scarce resources.
C)   how financial institutions set interest rates.
D)   whether resources are allocated fairly.E) B) and C)
F) A) and D)

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 13: The Costs of Production.

In his book,An Inquiry into the Nature and Causes of the Wealth of Nations,Adam Smith credits economies of scale to

Correct Answer
verified

For a large firm that produces and sells automobiles,which of the following costs would be a variable cost?

Correct Answer
verified

Analyzing the behavior of the firm enhances our understanding of

Correct Answer
verified

Table 13-12 Betty's Bakery -Refer to Table 13-12.What is the average total cost of producing 2 cakes at Betty's Bakery?

Correct Answer
verified

Correct Answer
verified

Which of the following factors is most likely to shift IBM's total cost and marginal cost curves downward?

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
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Correct Answer
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Table 13-1 -Refer to Table 13-1.What is total output when 4 workers are hired?

Correct Answer
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Figure 13-10 -Refer to Figure 13-10.The firm experiences economies of scale if it changes its level of output from

Correct Answer
verified

When a factory is operating in the short run,

Correct Answer
verified

Table 13-9 -Refer to Table 13-9.What is the marginal cost of producing the 1st poster?

Correct Answer
verified

The Wacky Widget company has total fixed costs of $100,000 per year.The firm's average variable cost is $5 for 10,000 widgets.At that level of output,the firm's average total costs equal

Correct Answer
verified

When marginal cost is greater than average cost,average cost is

Correct Answer
verified

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

Correct Answer
verified

At what level of output will average variable cost equal average total cost?

Correct Answer
verified

If marginal cost is equal to average total cost,then

Correct Answer
verified

Which of the following measures of cost is best described as "the cost of a typical unit of output if total cost is divided evenly over all the units produced?"

Correct Answer
verified

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 constant returns to scale at which output levels?

Correct Answer
verified

Exam 13: The Costs of Production.

In his book,An Inquiry into the Nature and Causes of the Wealth of Nations,Adam Smith credits economies of scale to

Correct AnswerverifiedShow Answer

For a large firm that produces and sells automobiles,which of the following costs would be a variable cost?

Correct AnswerverifiedShow Answer

Analyzing the behavior of the firm enhances our understanding of

Correct AnswerverifiedShow Answer

Table 13-12 Betty's Bakery -Refer to Table 13-12.What is the average total cost of producing 2 cakes at Betty's Bakery?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following factors is most likely to shift IBM's total cost and marginal cost curves downward?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 13-1 -Refer to Table 13-1.What is total output when 4 workers are hired?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When a factory is operating in the short run,

Correct AnswerverifiedShow Answer

Table 13-9 -Refer to Table 13-9.What is the marginal cost of producing the 1st poster?

Correct AnswerverifiedShow Answer

The Wacky Widget company has total fixed costs of $100,000 per year.The firm's average variable cost is $5 for 10,000 widgets.At that level of output,the firm's average total costs equal

Correct AnswerverifiedShow Answer

When marginal cost is greater than average cost,average cost is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

At what level of output will average variable cost equal average total cost?

Correct AnswerverifiedShow Answer

If marginal cost is equal to average total cost,then

Correct AnswerverifiedShow Answer

Which of the following measures of cost is best described as "the cost of a typical unit of output if total cost is divided evenly over all the units produced?"

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 constant returns to scale at which output levels?

Correct AnswerverifiedShow Answer

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