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Exam 13: The Costs of Production

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Question 111

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Diminishing marginal product exists when the total-cost curve becomes flatter as outputs increase.

A) True
B) False

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Question 112

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Which cost would be regarded as an implicit cost

A) the cost of accounting services
B) the opportunity cost of financial capital that has been invested in the business
C) the cost of compliance with government regulation
D) all costs that involve outlays of money by the firm

E) B) and C)
F) C) and D)

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Question 113

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Bob Edwards owns a bagel shop. Bob hires an economist who assesses the shape of the bagel shop’s average-total-cost (ATC) curve as a function of the number of bagels produced. The results indicate a U-shaped average-total-cost curve. Bob’s economist explains that ATC is U-shaped for two reasons. The first is the existence of diminishing marginal product, which causes it to rise. What would be the second reason? Assume that the marginal-cost curve is linear. (Hint: The second reason relates to average fixed cost.)

Implicit costs are costs that do not require an outlay of money by the firm.

Scenario 13-4 A firm experiences decreasing marginal product of labour with the addition of each worker regardless of the current output level. -Refer to Scenario 13-4.How will marginal cost behave

For a firm,what does the production function represent

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"

What is the efficient scale of a firm?

Which of the following must necessarily occur as the quantity of output increases