Question 1

A college student is thinking about running an ice cream truck over the summer. Which of the following would likely be an ongoing expense of the business?

Accepted Answer

A)  The cost of the truck
B)  The cost of the gasoline used
C)  The cost of ice cream scoopers
D)  None of these are ongoing expenses.E) All of the above
F) C) and D)

Question 2

The principle that states the marginal product of an input decreases as the quantity of the input increases is called:

Accepted Answer

A)  diminishing marginal product.
B)  increasing rate of return.
C)  production function.
D)  total product optimization.E) A) and D)
F) B) and D)

Question 3

When a company's accounting profit is zero, what will the economic profit most likely be?

Accepted Answer

A)  Zero
B)  Positive
C)  Negative
D)  All of these are equally likely.E) A) and B)
F) A) and C)

Question 4

If a firm decreases production, its:

Accepted Answer

A)  variable costs rise.
B)  fixed costs stay the same.
C)  total costs increase.
D)  All of these are correct.E) C) and D)
F) None of the above

Question 5

Suppose Larry's Lariats produces 25,000 lassos and sells each for $10. What is the company's profit?

Accepted Answer

A)  $250,000
B)  $25,000
C)  $125,000
D)  Not enough information is given to calculate profit.E) A) and B)
F) B) and C)

Question 6

The table shows costs for an individual firm. What is the variable cost of producing four units?

Accepted Answer

A)  $38
B)  $150
C)  $50
D)  Not enough information is given to calculate variable cost.E) None of the above
F) A) and D)

Question 7

Costs that require a firm to spend money are:

Accepted Answer

A)  fixed costs.
B)  variable costs.
C)  explicit costs.
D)  implicit costs.E) B) and C)
F) A) and D)

Question 8

Mika's Manicures leases a space in the local mall for $4,500 a month. For her business, this expense would be considered a(n) :

Accepted Answer

A)  implicit cost of $4,500.
B)  explicit cost of $4,500.
C)  explicit cost of $0.
D)  fixed cost of $4,500.E) A) and B)
F) B) and C)

Question 9

A sandwich shop has six months left on its lease to its storefront and equipment and currently employs three workers who work on an on-call basis, with no contract. Ingredients are bought daily. How long is the long run for the sandwich shop?

Accepted Answer

A)  The standard year, as there is nothing unusual about this business.
B)  The long and short run are the same in this case.
C)  Six months, after which all inputs listed become variable.
D)  None of these are correct.E) B) and C)
F) A) and C)

Question 10

Priya needs $50,000 to start up her own business and get it off the ground. She can either withdraw the money from her savings account, where she currently earns 2 percent, or she can take out a loan for $50,000 and pay 2 percent interest. Priya should compare _____ and choose to _____.

Accepted Answer

A)  the implicit cost of $1,000 to the explicit cost of $51,000; use her savings
B)  the implicit cost of $51,000 to the explicit cost of $1,000; borrow the money
C)  the explicit cost of $1,000 to the implicit cost of $1,000; either use her savings or borrow the money, as each option costs the same
D)  the explicit cost of $1,000 to the implicit cost of $51,000; borrow the moneyE) A) and C)
F) B) and C)

Question 11

Total cost can be defined as:

Accepted Answer

A)  the amount that a firm receives from the sale of goods and services.
B)  the amount that an individual spends on all normal goods and services within a specified period of time.
C)  the amount that a firm spends on all inputs that go into producing a good or service.
D)  the total number of purchases of a good or service by an individual.E) B) and C)
F) All of the above

Question 12

Suppose Bev's Bags makes large and small handbags. Bev rents an industrial space where she keeps the company's fabric, industrial sewing machine, measuring board, cutting shears, extra needles, thread, buttons, and labels. Bev can produce three bags an hour, regardless of the size of the bag. If Bev were to produce no bags, which of the following would be considered a variable cost?

Accepted Answer

A)  The cost of the fabric
B)  The sewing machine
C)  The measuring board
D)  None of these are variable costs if no bags are produced.E) B) and D)
F) All of the above

Exam 12: The Costs of Production

If a firm decreases production, its:

Correct Answer
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Mika's Manicures leases a space in the local mall for $4,500 a month. For her business, this expense would be considered a(n) :

Correct Answer
verified

The table shows costs for an individual firm. What is the variable cost of producing four units?

Correct Answer
verified

Suppose Larry's Lariats produces 25,000 lassos and sells each for $10. What is the company's profit?

Correct Answer
verified

When a company's accounting profit is zero, what will the economic profit most likely be?

Correct Answer
verified

Costs that require a firm to spend money are:

Correct Answer
verified

Correct Answer
verified

Total cost can be defined as:

Correct Answer
verified

The principle that states the marginal product of an input decreases as the quantity of the input increases is called:

Correct Answer
verified

A sandwich shop has six months left on its lease to its storefront and equipment and currently employs three workers who work on an on-call basis, with no contract. Ingredients are bought daily. How long is the long run for the sandwich shop?

Correct Answer
verified

Priya needs $50,000 to start up her own business and get it off the ground. She can either withdraw the money from her savings account, where she currently earns 2 percent, or she can take out a loan for $50,000 and pay 2 percent interest. Priya should compare _ and choose to _.

Correct Answer
verified

A college student is thinking about running an ice cream truck over the summer. Which of the following would likely be an ongoing expense of the business?

Correct Answer
verified

Exam 12: The Costs of Production

If a firm decreases production, its:

Correct AnswerverifiedShow Answer

Mika's Manicures leases a space in the local mall for $4,500 a month. For her business, this expense would be considered a(n) :

Correct AnswerverifiedShow Answer

The table shows costs for an individual firm. What is the variable cost of producing four units?

Correct AnswerverifiedShow Answer

Suppose Larry's Lariats produces 25,000 lassos and sells each for $10. What is the company's profit?

Correct AnswerverifiedShow Answer

When a company's accounting profit is zero, what will the economic profit most likely be?

Correct AnswerverifiedShow Answer

Costs that require a firm to spend money are:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Total cost can be defined as:

Correct AnswerverifiedShow Answer

The principle that states the marginal product of an input decreases as the quantity of the input increases is called:

Correct AnswerverifiedShow Answer

A sandwich shop has six months left on its lease to its storefront and equipment and currently employs three workers who work on an on-call basis, with no contract. Ingredients are bought daily. How long is the long run for the sandwich shop?

Correct AnswerverifiedShow Answer

Priya needs $50,000 to start up her own business and get it off the ground. She can either withdraw the money from her savings account, where she currently earns 2 percent, or she can take out a loan for $50,000 and pay 2 percent interest. Priya should compare _____ and choose to _____.

Correct AnswerverifiedShow Answer

A college student is thinking about running an ice cream truck over the summer. Which of the following would likely be an ongoing expense of the business?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Priya needs $50,000 to start up her own business and get it off the ground. She can either withdraw the money from her savings account, where she currently earns 2 percent, or she can take out a loan for $50,000 and pay 2 percent interest. Priya should compare _ and choose to _.

Correct Answer
verified

Correct Answer
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