Question 1

Table 12-9
 
-Refer to Table 12-9.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) A) and B)
F) All of the above

Question 2

Constant returns to scale occur when the firm's long-run

Accepted Answer

A)   total costs are constant as output increases.
B)   average total costs are constant as output increases.
C)   average cost curve is falling as output increases.
D)   average cost curve is rising as output increases.E) None of the above
F) A) and B)

Question 3

Suppose that for a particular firm the only variable input into the production process is labor and that output equals zero when no workers are hired.In addition,suppose that marginal cost of the third worker hired is $40,and the average total cost when three workers are hired is $50.What is the total cost of production when three workers are hired?

Accepted Answer

A)   $50
B)   $90
C)   $120
D)   $150E) All of the above
F) B) and D)

Question 4

For a firm,the relationship between the quantity of inputs and quantity of output is called the

Accepted Answer

A)   profit function.
B)   production function.
C)   total-cost function.
D)   quantity function.E) A) and B)
F) All of the above

Question 5

Because of the greater flexibility that firms have in the long run,all short-run cost curves lie on or above the long-run curve.

Accepted Answer

A) True 
 B)False

Question 6

The Big Blue Sky jet company has long-run total costs of $20 million if it produces 5 jets and long-run total costs of $24 million if it produces 6 jets.The Big Blue Sky jet company is experiencing

Accepted Answer

A)   economies of scale.
B)   constant returns to scale.
C)   diseconomies of scale.
D)   negative profits.E) B) and C)
F) A) and B)

Question 7

The marginal product of any input is the

Accepted Answer

A)   increase in total cost associated with a one-unit increase in production.
B)   change in total output associated with a $1.00 increase in total cost.
C)   increase in total cost resulting from the hiring of an additional worker.
D)   increase in total output obtained from one additional unit of that input.E) A) and B)
F) A) and C)

Question 8

The marginal product of labor is equal to the

Accepted Answer

A)   incremental cost associated with a one unit increase in labor.
B)   incremental profit associated with a one unit increase in labor.
C)   increase in labor necessary to generate a one unit increase in output.
D)   increase in output obtained from a one unit increase in labor.E) A) and C)
F) B) and C)

Question 9

Which of the following statements is correct?

Accepted Answer

A)   Assuming that explicit costs are positive,economic profit is greater than accounting profit.
B)   Assuming that implicit costs are positive,accounting profit is greater than economic profit.
C)   Assuming that explicit costs are positive,accounting profit is equal to economic profit.
D)   Assuming that implicit costs are positive,economic profit is positive.E) C) and D)
F) B) and D)

Question 10

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

Accepted Answer

A)   $25
B)   $50
C)   $100
D)   $150E) None of the above
F) A) and D)

Question 11

Scenario 12-11
Zach withdrew $400,000 out of his personal savings account and used it to start his new cookie business.The bank account pays 3 percent interest per year.During the first year of his business,Zach sold 6,000 boxes of cookies for $2.50 per box.Also during the first year,the cookie business made monetary outlays of $9,000.You may assume that there is no opportunity cost to Zach's time.
-Refer to Scenario 12-11.Zach's accounting profit for the year was

Accepted Answer

A)   $-494,000.
B)   $-6,000.
C)   $6,000.
D)   $12,000.E) A) and B)
F) A) and C)

Question 12

If a firm experiences constant returns to scale at all output levels,then its long-run average total cost curve would

Accepted Answer

A)   slope downward.
B)   be horizontal.
C)   slope upward.
D)   slope downward for low output levels and upward for high output levels.E) A) and B)
F) B) and C)

Question 13

Suppose that a "doggie day care" firm uses only two inputs: hourly workers (labor) and a building (capital) .In the short run,the firm most likely considers

Accepted Answer

A)   both labor and capital to be fixed.
B)   both labor and capital to be variable.
C)   labor to be variable and capital to be fixed.
D)   capital to be variable and labor to be fixed.E) C) and D)
F) A) and B)

Question 14

Table 12-14
Listed in the table are the long-run total costs for three different firms.
 
-Refer to Table 12-14.Which firm is experiencing diseconomies of scale?

Accepted Answer

A)   Firm A only
B)   Firm B only
C)   Firm C only
D)   Firm A and Firm B onlyE) A) and B)
F) A) and C)

Question 15

When the marginal product of an input declines as the quantity of that input increases,the production function exhibits

Accepted Answer

A)   increasing marginal product.
B)   diminishing marginal product.
C)   diminishing total product.
D)   Both b and c are correct.E) A) and B)
F) C) and D)

Question 16

When economists speak of a firm's costs,they are usually excluding the opportunity costs.

Accepted Answer

A) True 
 B)False

Question 17

Scenario 12-11
Zach withdrew $400,000 out of his personal savings account and used it to start his new cookie business.The bank account pays 3 percent interest per year.During the first year of his business,Zach sold 6,000 boxes of cookies for $2.50 per box.Also during the first year,the cookie business made monetary outlays of $9,000.You may assume that there is no opportunity cost to Zach's time.
-Refer to Scenario 12-11.Zach's economic profit for the year was

Accepted Answer

A)   $-506,000.
B)   $-6,000.
C)   $3,000.
D)   $6,000.E) B) and D)
F) All of the above

Question 18

Total revenue minus both explicit and implicit costs is called

Accepted Answer

A)   accounting profit.
B)   economic profit.
C)   average total cost.
D)   total cost.E) All of the above
F) C) and D)

Question 19

The fact that many inputs are fixed in the short run but variable in the long run has little impact on the firm's cost curves.

Accepted Answer

A) True 
 B)False

Question 20

When a firm is making a profit-maximizing production decision,which of the following principles of economics is likely to be most important to the firm's decision?

Accepted Answer

A)   The cost of something is what you give up to get it.
B)   A country's standard of living depends on its ability to produce goods and services.
C)   Prices rise when the government prints too much money.
D)   Governments can sometimes improve market outcomes.E) None of the above
F) A) and D)

Exam 12: The Costs of Production

When a firm is making a profit-maximizing production decision,which of the following principles of economics is likely to be most important to the firm's decision?

Correct Answer
verified

Table 12-14 Listed in the table are the long-run total costs for three different firms. -Refer to Table 12-14.Which firm is experiencing diseconomies of scale?

Correct Answer
verified

Total revenue minus both explicit and implicit costs is called

Correct Answer
verified

Suppose that a "doggie day care" firm uses only two inputs: hourly workers (labor) and a building (capital) .In the short run,the firm most likely considers

Correct Answer
verified

For a firm,the relationship between the quantity of inputs and quantity of output is called the

Correct Answer
verified

When economists speak of a firm's costs,they are usually excluding the opportunity costs.

Correct Answer
verified

If a firm experiences constant returns to scale at all output levels,then its long-run average total cost curve would

Correct Answer
verified

Correct Answer
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Table 12-9 -Refer to Table 12-9.What is the marginal cost of producing the 1st poster?

Correct Answer
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The marginal product of labor is equal to the

Correct Answer
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Which of the following statements is correct?

Correct Answer
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When the marginal product of an input declines as the quantity of that input increases,the production function exhibits

Correct Answer
verified

The Big Blue Sky jet company has long-run total costs of $20 million if it produces 5 jets and long-run total costs of $24 million if it produces 6 jets.The Big Blue Sky jet company is experiencing

Correct Answer
verified

Because of the greater flexibility that firms have in the long run,all short-run cost curves lie on or above the long-run curve.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

The marginal product of any input is the

Correct Answer
verified

Constant returns to scale occur when the firm's long-run

Correct Answer
verified

The fact that many inputs are fixed in the short run but variable in the long run has little impact on the firm's cost curves.

Correct Answer
verified

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

Correct Answer
verified

Exam 12: The Costs of Production

When a firm is making a profit-maximizing production decision,which of the following principles of economics is likely to be most important to the firm's decision?

Correct AnswerverifiedShow Answer

Table 12-14 Listed in the table are the long-run total costs for three different firms. -Refer to Table 12-14.Which firm is experiencing diseconomies of scale?

Correct AnswerverifiedShow Answer

Total revenue minus both explicit and implicit costs is called

Correct AnswerverifiedShow Answer

Suppose that a "doggie day care" firm uses only two inputs: hourly workers (labor) and a building (capital) .In the short run,the firm most likely considers

Correct AnswerverifiedShow Answer

For a firm,the relationship between the quantity of inputs and quantity of output is called the

Correct AnswerverifiedShow Answer

When economists speak of a firm's costs,they are usually excluding the opportunity costs.

Correct AnswerverifiedShow Answer

If a firm experiences constant returns to scale at all output levels,then its long-run average total cost curve would

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 12-9 -Refer to Table 12-9.What is the marginal cost of producing the 1st poster?

Correct AnswerverifiedShow Answer

The marginal product of labor is equal to the

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

When the marginal product of an input declines as the quantity of that input increases,the production function exhibits

Correct AnswerverifiedShow Answer

The Big Blue Sky jet company has long-run total costs of $20 million if it produces 5 jets and long-run total costs of $24 million if it produces 6 jets.The Big Blue Sky jet company is experiencing

Correct AnswerverifiedShow Answer

Because of the greater flexibility that firms have in the long run,all short-run cost curves lie on or above the long-run curve.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The marginal product of any input is the

Correct AnswerverifiedShow Answer

Constant returns to scale occur when the firm's long-run

Correct AnswerverifiedShow Answer

The fact that many inputs are fixed in the short run but variable in the long run has little impact on the firm's cost curves.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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