Question 1

The marginal cost curve crosses the average total cost curve at

Accepted Answer

A)   the efficient scale.
B)   the minimum point on the average total cost curve.
C)   a point where the marginal cost curve is rising.
D)   All of the above are correct.E) B) and C)
F) A) and D)

Question 2

Figure 12-9
The figure below depicts average total cost functions for a firm that produces automobiles. 
-Refer to Figure 12-9.This firm experiences diseconomies of scale at what output levels?

Accepted Answer

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

Question 3

Walter used to work as a high school teacher for $40,000 per year but quit in order to start his own painting business.To invest in his painting business,he withdrew $20,000 from his savings,which paid 3 percent interest,and borrowed $30,000 from his uncle,whom he pays 3 percent interest per year.Last year Walter paid $25,000 for supplies and had revenue of $60,000.Walter asked Tyler the accountant and Greg the economist to calculate his painting business's costs.

Accepted Answer

A)   Tyler says his costs are $25,900,and Greg says his costs are $66,500.
B)   Tyler says his costs are $25,000,and Greg says his costs are $65,000.
C)   Tyler says his costs are $66,500,and Greg says his costs are $66,500.
D)   Tyler says his costs are $75,000,and Greg says his costs are $41,500.E) C) and D)
F) A) and D)

Question 4

Figure 12-7 
-Refer to Figure 12-7.Which of the figures represents the total cost curve for a typical firm?

Accepted Answer

A)   Figure 1
B)   Figure 2
C)   Figure 3
D)   Figure 4E) B) and C)
F) A) and D)

Question 5

The value of a business owner's time is an example of

Accepted Answer

A)   an opportunity cost.
B)   a fixed cost.
C)   an explicit cost.
D)   total revenue.E) A) and B)
F) B) and C)

Question 6

Scenario 12-17
Suppose that a given firm experiences decreasing marginal product of labor with the addition of each worker regardless of the current output level.
-Refer to Scenario 12-17.Marginal cost will be

Accepted Answer

A)   rising at all points.
B)   falling at all points.
C)   U-shaped.
D)   constant.E) A) and D)
F) A) and C)

Question 7

Scenario 12-6
Tony is a wheat farmer,but he also spends part of his day teaching guitar lessons.Due to the popularity of his local country western band,Farmer Tony has more students requesting lessons than he has time for if he is to also maintain his farming business.Farmer Tony charges $25 an hour for his guitar lessons.One spring day,he spends 10 hours in his fields planting $130 worth of seeds on his farm.He expects that the seeds he planted will yield $300 worth of wheat.
-Refer to Scenario 12-6.Tony's accounting profit equals

Accepted Answer

A)   $-80.
B)   $130.
C)   $170.
D)   $260.E) A) and B)
F) A) and C)

Question 8

Scenario 12-16
A certain firm produces and sells staplers.Last year,it produced 7,000 staplers and sold each stapler for $6.In producing the 7,000 staplers,it incurred variable costs of $28,000 and a total cost of $45,000.
-Refer to Scenario 12-16.Suppose the owner of the business had an offer to work for another firm for $25,000.The firm's economic profit for the year was

Accepted Answer

A)   $-28,000.
B)   $-25,000
C)   $-3,000.
D)   $17,000.E) All of the above
F) A) and B)

Question 9

Economic profit

Accepted Answer

A)   will never exceed accounting profit.
B)   is most often equal to accounting profit.
C)   is always at least as large as accounting profit.
D)   is a less complete measure of profitability than accounting profit.E) B) and D)
F) A) and D)

Question 10

Which of the following expressions is correct?

Accepted Answer

A)   accounting profit = total revenue - explicit costs
B)   economic profit = total revenue - implicit costs
C)   economic profit = total revenue - explicit costs
D)   Both a and b are correct.E) C) and D)
F) B) and D)

Question 11

Table 12-16
Listed in the table are the long-run total costs for three different firms.
 
-Refer to Table 12-16.Firm B is experiencing constant returns to scale.

Accepted Answer

A) True 
 B)False

Question 12

The use of specialization to achieve economies of scale is one reason modern societies are as prosperous as they are.

Accepted Answer

A) True 
 B)False

Question 13

Table 12-7
The Flying Elvis Copter Rides
 
-Refer to Table 12-7.What is the value of C?

Accepted Answer

A)   $25
B)   $50
C)   $100
D)   $200E) C) and D)
F) B) and D)

Question 14

Joy sells 200 glasses of iced tea at $0.50 each.Her total costs are $25.Her profits are

Accepted Answer

A)   $25.
B)   $75.
C)   $100.
D)   $175.E) All of the above
F) B) and C)

Question 15

Scenario 12-15
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 12-15.What is the shape of Farmer Jack's marginal cost curve?

Accepted Answer

A)   upward sloping
B)   downward sloping
C)   U-shaped
D)   constantE) C) and D)
F) B) and D)

Question 16

Table 12-7
The Flying Elvis Copter Rides
 
-Refer to Table 12-7.What is the value of K?

Accepted Answer

A)   $25
B)   $50
C)   $110
D)   $220E) B) and C)
F) A) and D)

Question 17

Figure 12-3 
-Refer to Figure 12-3.Which of the following statements best captures the nature of the underlying production function (not pictured) ?

Accepted Answer

A)   Output increases at a decreasing rate with additional units of input.
B)   Output increases at an increasing rate with additional units of input.
C)   Output decreases at a decreasing rate with additional units of input.
D)   Output decreases at an increasing rate with additional units of input.E) B) and D)
F) A) and D)

Question 18

What effect,if any,does diminishing marginal product have on the shape of the marginal cost curve?

Accepted Answer

Diminishing marginal...

Question 19

Scenario 12-6
Tony is a wheat farmer,but he also spends part of his day teaching guitar lessons.Due to the popularity of his local country western band,Farmer Tony has more students requesting lessons than he has time for if he is to also maintain his farming business.Farmer Tony charges $25 an hour for his guitar lessons.One spring day,he spends 10 hours in his fields planting $130 worth of seeds on his farm.He expects that the seeds he planted will yield $300 worth of wheat.
-Refer to Scenario 12-6.What is the total opportunity cost of the day that Farmer Tony spent in the field planting wheat?

Accepted Answer

A)   $130
B)   $250
C)   $300
D)   $380E) A) and D)
F) B) and C)

Question 20

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

Exam 12: The Costs of Production

Correct Answer
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The use of specialization to achieve economies of scale is one reason modern societies are as prosperous as they are.

Correct Answer
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Economic profit

Correct Answer
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Which of the following expressions is correct?

Correct Answer
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Correct Answer
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Joy sells 200 glasses of iced tea at $0.50 each.Her total costs are $25.Her profits are

Correct Answer
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Correct Answer
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Figure 12-7 -Refer to Figure 12-7.Which of the figures represents the total cost curve for a typical firm?

Correct Answer
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Figure 12-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 12-9.This firm experiences diseconomies of scale at what output levels?

Correct Answer
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Scenario 12-17 Suppose that a given firm experiences decreasing marginal product of labor with the addition of each worker regardless of the current output level. -Refer to Scenario 12-17.Marginal cost will be

Correct Answer
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Table 12-16 Listed in the table are the long-run total costs for three different firms. -Refer to Table 12-16.Firm B is experiencing constant returns to scale.

Correct Answer
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Table 12-7 The Flying Elvis Copter Rides -Refer to Table 12-7.What is the value of K?

Correct Answer
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The value of a business owner's time is an example of

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

Correct Answer
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Figure 12-3 -Refer to Figure 12-3.Which of the following statements best captures the nature of the underlying production function (not pictured) ?

Correct Answer
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Table 12-7 The Flying Elvis Copter Rides -Refer to Table 12-7.What is the value of C?

Correct Answer
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Correct Answer
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What effect,if any,does diminishing marginal product have on the shape of the marginal cost curve?

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Diminishing marginal...
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The marginal cost curve crosses the average total cost curve at

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Exam 12: The Costs of Production

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The use of specialization to achieve economies of scale is one reason modern societies are as prosperous as they are.

Correct AnswerverifiedShow Answer

Economic profit

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Which of the following expressions is correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Joy sells 200 glasses of iced tea at $0.50 each.Her total costs are $25.Her profits are

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 12-7 -Refer to Figure 12-7.Which of the figures represents the total cost curve for a typical firm?

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Figure 12-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 12-9.This firm experiences diseconomies of scale at what output levels?

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Scenario 12-17 Suppose that a given firm experiences decreasing marginal product of labor with the addition of each worker regardless of the current output level. -Refer to Scenario 12-17.Marginal cost will be

Correct AnswerverifiedShow Answer

Table 12-16 Listed in the table are the long-run total costs for three different firms. -Refer to Table 12-16.Firm B is experiencing constant returns to scale.

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Table 12-7 The Flying Elvis Copter Rides -Refer to Table 12-7.What is the value of K?

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The value of a business owner's time is an example of

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

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Figure 12-3 -Refer to Figure 12-3.Which of the following statements best captures the nature of the underlying production function (not pictured) ?

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Table 12-7 The Flying Elvis Copter Rides -Refer to Table 12-7.What is the value of C?

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Correct AnswerverifiedShow Answer

What effect,if any,does diminishing marginal product have on the shape of the marginal cost curve?

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The marginal cost curve crosses the average total cost curve at

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Diminishing marginal...
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