Question 1

When the slope of the total production curve steepens,it means:

Accepted Answer

A)  the marginal product must be increasing.
B)  the marginal product must be decreasing.
C)  diminishing marginal product must hold.
D)  None of these is true.E) A) and B)
F) All of the above

Question 2

Total cost can be defined as:

Accepted Answer

A)  the amount that a firm spends on all inputs that go into producing a good or service.
B)  the amount that a firm receives from the sale of goods and services.
C)  the amount that an individual spends on all normal goods and services within a specified period of time.
D)  None of these is correct.E) B) and C)
F) A) and D)

Question 3

Returns to scale describes the long-run relationship between:

Accepted Answer

A)  the quantity of output and average total cost.
B)  the quantity of input and the average variable cost.
C)  the quantity of output and the average variable cost.
D)  the quantity of input and the average total cost.E) B) and D)
F) C) and D)

Question 4

A cigar factory employs 20 workers and produces 1,000 cigars a day.The company reduces the workforce to 19 workers and produces 912 cigars a day.The 20th worker:

Accepted Answer

A)  had a marginal product of 88 cigars.
B)  caused average product to fall.
C)  must have had a lower marginal product than the 19th worker.
D)  All of these are true.E) A) and D)
F) All of the above

Question 5

Implicit costs are costs that:

Accepted Answer

A)  require a firm to spend money.
B)  represent forgone opportunities.
C)  do not depend on the quantity of output produced.
D)  depend on the quantity of output produced.E) B) and D)
F) B) and C)

Question 6

Imagine Tom's annual salary as an assistant store manager is $30,000,he owns a building that rents for $10,000 yearly,and his financial assets generate $1,000 per year in interest.One day,after deciding to be his own boss,he quits his job,evicts his tenants,and uses his financial assets to establish a bicycle repair shop.To run the business,he outlays $15,000 in cash to cover all the costs involved with running the business,and earns revenues of $50,000.Tom should:

Accepted Answer

A)  close his shop and go back to what he was doing before with his time and assets,because it was earning him $6,000 more than he's earning now.
B)  keep his shop going because he's earning a healthy $35,000 a year.
C)  keep his shop going because he's earning $5,000 more than his salary before.
D)  None of these is true.E) A) and B)
F) A) and C)

Question 7

When a firm is on the portion of its long run ATC curve that slopes upward,it is experiencing:

Accepted Answer

A)  diseconomies of scale.
B)  economies of scale.
C)  constant returns to scale.
D)  Any of these is possible.E) B) and C)
F) A) and C)

Question 8

The relationship between the quantity of inputs and the quantity of outputs is called:

Accepted Answer

A)  a production function.
B)  an input-output function.
C)  a cost function.
D)  a resource function.E) B) and D)
F) A) and B)

Question 9

Suppose that an accounting firm with 10 employees hires another accountant.By doing so,it goes from serving 30 customers each week to serving 32 customers each week.What is the marginal product of labor for the new accountant?

Accepted Answer

A)  32
B)  2
C)  62
D)  10E) A) and B)
F) C) and D)

Question 10

Returns that occur in the long run when an increase in the quantity of output decreases average total cost are called:

Accepted Answer

A)  economies of scale.
B)  diseconomies of scale.
C)  constant returns to scale.
D)  minimum average total cost.E) A) and C)
F) None of the above A

Question 11

Imagine Tom's annual salary as an assistant store manager is $30,000,he owns a building that rents for $10,000 yearly,and his financial assets generate $1,000 per year in interest.One day,after deciding to be his own boss,he quits his job,evicts his tenants,and uses his financial assets to establish a bicycle repair shop.To run the business,he outlays $15,000 in cash to cover all the costs involved with running the business,and earns revenues of $50,000.Which of the following statements is true?

Accepted Answer

A)  Tom has an opportunity cost of $41,000.
B)  Tom earns an accounting profit of $35,000.
C)  Tom experiences an economic loss of $6000.
D)  All of these are true.E) B) and D)
F) B) and C)

Question 12

When a firm is on the flat portion of its long-run ATC curve,

Accepted Answer

A)  it is experiencing constant returns to scale.
B)  changing its firm size will not affect its total cost per unit.
C)  it is capturing the lowest average total costs possible in the industry.
D)  All of these are true.E) B) and C)
F) B) and D) D

Question 13

The long run:

Accepted Answer

A)  depends on the type of firm and type of production being considered.
B)  is defined as however long it would take a firm to vary all of its costs.
C)  is longer in industries that take longer to make adjustments in input levels.
D)  All of these are true.E) None of the above
F) C) and D)

Question 14

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

Question 15

The total cost curve:

Accepted Answer

A)  is the sum of the variable cost curve and fixed cost curve.
B)  is parallel to the variable cost curve.
C)  is always above the variable cost curve.
D)  All of these are true.E) None of the above
F) A) and B)

Question 16

The additional cost a firm will incur by producing one additional unit of output is the:

Accepted Answer

A)  marginal cost.
B)  variable cost.
C)  fixed cost.
D)  total cost.E) B) and D)
F) B) and C)

Question 17

Suppose Sam's Shoe Co.makes one kind of shoe.An example of a variable cost for this company would be:

Accepted Answer

A)  a sewing machine.
B)  the leather needed to make the shoes.
C)  the lease to the factory building.
D)  All of these are examples of variable costs.E) All of the above
F) B) and C) B

Question 18

The short run:

Accepted Answer

A)  is defined by the presence of a fixed cost for a firm.
B)  is typically defined by the process cycle of the particular firm.
C)  is generally less than a year.
D)  All of these are true.E) C) and D)
F) B) and C)

Question 19

Accounting profits are calculated as:

Accepted Answer

A)  total revenue minus explicit costs.
B)  total revenue minus all opportunity costs,explicit and implicit.
C)  total revenue minus implicit costs.
D)  None of these is true.E) B) and C)
F) A) and B)

Question 20

Davy's Doggie Daycare rents a warehouse and field for $2,000 a month to house its boarding pooches.Farmer Fred owns the property;he used to use it for farming and made $3,000 a month,but has since retired.What is the cost of the warehouse and field to Davy?

Accepted Answer

A)  It is an explicit cost of $2,000.
B)  It is an implicit cost of $3,000.
C)  It is an implicit cost of $0.
D)  There is both an explicit and implicit cost totaling $5,000.E) None of the above
F) A) and D)

Exam 12: The Costs of Production

When the slope of the total production curve steepens,it means:

Correct Answer
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Total cost can be defined as:

Correct Answer
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Returns to scale describes the long-run relationship between:

Correct Answer
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A cigar factory employs 20 workers and produces 1,000 cigars a day.The company reduces the workforce to 19 workers and produces 912 cigars a day.The 20^th worker:

Correct Answer
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Implicit costs are costs that:

Correct Answer
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Correct Answer
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When a firm is on the portion of its long run ATC curve that slopes upward,it is experiencing:

Correct Answer
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The relationship between the quantity of inputs and the quantity of outputs is called:

Correct Answer
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Suppose that an accounting firm with 10 employees hires another accountant.By doing so,it goes from serving 30 customers each week to serving 32 customers each week.What is the marginal product of labor for the new accountant?

Correct Answer
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Returns that occur in the long run when an increase in the quantity of output decreases average total cost are called:

Correct Answer
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A

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When a firm is on the flat portion of its long-run ATC curve,

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D

The long run:

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

Correct Answer
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The total cost curve:

Correct Answer
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The additional cost a firm will incur by producing one additional unit of output is the:

Correct Answer
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Suppose Sam's Shoe Co.makes one kind of shoe.An example of a variable cost for this company would be:

Correct Answer
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B

The short run:

Correct Answer
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Accounting profits are calculated as:

Correct Answer
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Davy's Doggie Daycare rents a warehouse and field for $2,000 a month to house its boarding pooches.Farmer Fred owns the property;he used to use it for farming and made $3,000 a month,but has since retired.What is the cost of the warehouse and field to Davy?

Correct Answer
verified

Exam 12: The Costs of Production

When the slope of the total production curve steepens,it means:

Correct AnswerverifiedShow Answer

Total cost can be defined as:

Correct AnswerverifiedShow Answer

Returns to scale describes the long-run relationship between:

Correct AnswerverifiedShow Answer

A cigar factory employs 20 workers and produces 1,000 cigars a day.The company reduces the workforce to 19 workers and produces 912 cigars a day.The 20th worker:

Correct AnswerverifiedShow Answer

Implicit costs are costs that:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When a firm is on the portion of its long run ATC curve that slopes upward,it is experiencing:

Correct AnswerverifiedShow Answer

The relationship between the quantity of inputs and the quantity of outputs is called:

Correct AnswerverifiedShow Answer

Suppose that an accounting firm with 10 employees hires another accountant.By doing so,it goes from serving 30 customers each week to serving 32 customers each week.What is the marginal product of labor for the new accountant?

Correct AnswerverifiedShow Answer

Returns that occur in the long run when an increase in the quantity of output decreases average total cost are called:

Correct AnswerverifiedA

Correct AnswerverifiedShow Answer

When a firm is on the flat portion of its long-run ATC curve,

Correct AnswerverifiedD

The long run:

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

The total cost curve:

Correct AnswerverifiedShow Answer

The additional cost a firm will incur by producing one additional unit of output is the:

Correct AnswerverifiedShow Answer

Suppose Sam's Shoe Co.makes one kind of shoe.An example of a variable cost for this company would be:

Correct AnswerverifiedB

The short run:

Correct AnswerverifiedShow Answer

Accounting profits are calculated as:

Correct AnswerverifiedShow Answer

Davy's Doggie Daycare rents a warehouse and field for $2,000 a month to house its boarding pooches.Farmer Fred owns the property;he used to use it for farming and made $3,000 a month,but has since retired.What is the cost of the warehouse and field to Davy?

Correct AnswerverifiedShow Answer

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A cigar factory employs 20 workers and produces 1,000 cigars a day.The company reduces the workforce to 19 workers and produces 912 cigars a day.The 20^th worker:

Correct Answer
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A

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D

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B

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