Question 1

An example of an explicit cost for the owner of a tattoo parlor would be the wages that she could earn if she worked as a graphic artist for an advertising agency.

Accepted Answer

A) True 
 B)False

Question 2

If the marginal cost of producing the tenth unit of output is $2.50,and if the average total cost of producing the tenth unit of output is $3,then at ten units of output,average total cost is rising.

Accepted Answer

A) True 
 B)False

Question 3

Table 12-8
 
-Refer to Table 12-8.What is the average variable cost of producing 5 units of output?

Accepted Answer

A)   $4
B)   $5
C)   $40
D)   $44E) A) and B)
F) C) and D)

Question 4

When a firm's long-run average total costs do not vary as output increases,the firm exhibits

Accepted Answer

A)   economies of scale.
B)   constant returns to scale.
C)   diseconomies of scale.
D)   an efficient use of resources.E) C) and D)
F) A) and B) B

Question 5

In the long run Firm A incurs total costs of $1,200 when output is 30 units and $1,600 when output is 40 units.Firm A exhibits

Accepted Answer

A)   diseconomies of scale because total cost is rising as output rises.
B)   constant returns to scale because average total cost is constant as output rises.
C)   diseconomies of scale because average total cost is rising as output rises.
D)   economies of scale because average total cost is falling as output rises.E) B) and C)
F) B) and D)

Question 6

If Franco's Pizza Parlor knows that the marginal cost of the 500th pizza is $3.50 and that the average total cost of making 499 pizzas is $3.30,then

Accepted Answer

A)   average total costs are rising at Q = 500.
B)   average total costs are falling at Q = 500.
C)   total costs are falling at Q = 500.
D)   average variable costs must be falling.E) B) and D)
F) B) and C)

Question 7

Which of the following can be added to profit to obtain total revenue?

Accepted Answer

A)   net profit
B)   capital profit
C)   operational profit
D)   total costE) A) and B)
F) A) and C) D

Question 8

The fundamental reason that marginal cost eventually rises as output increases is because of

Accepted Answer

A)   economies of scale.
B)   diseconomies of scale.
C)   diminishing marginal product.
D)   rising average fixed cost.E) B) and C)
F) None of the above

Question 9

Anna borrows $5,000 from a bank and withdraws $1,000 from her personal savings to start a coffee shop.The interest rate is 5 percent for both the bank loan and her personal savings.Her opportunity cost of capital is $250.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A)   $0
B)   $50
C)   $220
D)   $270E) A) and B)
F) A) and C)

Question 11

Scenario 12-7
Wanda owns a lemonade stand.She produces lemonade using five inputs: water,sugar,lemons,paper cups,and labor.Her costs per glass are as follows: $0.01 for water,$0.02 for sugar,$0.03 for lemons,$0.02 for cups,and $0.10 for the opportunity cost of her labor.She can sell 300 glasses for $0.50 each.
-Refer to Scenario 12-7.What are Wanda's total economic costs per glass?

Accepted Answer

A)   $0.18
B)   $0.10
C)   $0.08
D)   $0.02E) B) and D)
F) A) and B)

Question 12

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.Average fixed cost will be

Accepted Answer

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

Question 13

Industrial organization is the study of how

Accepted Answer

A)   labor unions organize workers in industries.
B)   profitable firms are in organized industries.
C)   industries organize for political advantage.
D)   firms' decisions regarding prices and quantities depend on the market conditions they face.E) A) and D)
F) A) and C)

Question 14

Assume Jack received all As in his classes last semester.If Jack gets all Bs in his classes this semester,his GPA may or may not fall.

Accepted Answer

A) True 
 B)False  True

Question 15

The amount by which total cost rises when the firm produces one additional unit of output is called

Accepted Answer

A)   average cost.
B)   marginal cost.
C)   fixed cost.
D)   variable cost.E) All of the above
F) A) and B)

Question 16

Scenario 12-10
Walter builds birdhouses.He spends $5 on the materials for each birdhouse.He can build one in 30 minutes.He is semi-retired but earns $8 per hour at the local hardware store.He can sell a birdhouse for $20 each.
-Refer to Scenario 12-10.An accountant would calculate the total profit for one birdhouse to be

Accepted Answer

A)   $7.
B)   $11.
C)   $12.
D)   $15.E) A) and D)
F) A) and B)

Question 17

Table 12-4
Charles's Math Tutoring
 
-Refer to Table 12-4.What is the marginal product of the third worker?

Accepted Answer

A)   15 students
B)   20 students
C)   35 students
D)   60 studentsE) A) and D)
F) B) and D)

Question 18

Table 12-15
Consider the following table of long-run total cost for four different firms:
 
-Refer to Table 12-13.Firm 1's efficient scale occurs at what quantity?

Accepted Answer

A)   2
B)   3
C)   4
D)   5E) A) and B)
F) B) and D)

Question 19

When average cost is greater than marginal cost,marginal cost must be

Accepted Answer

A)   rising.
B)   falling.
C)   constant.
D)   The direction of change in marginal cost cannot be determined from this information.E) B) and D)
F) A) and C)

Question 20

Economies of scale occur when a firm's

Accepted Answer

A)   marginal costs are constant as output increases.
B)   long-run average total costs are decreasing as output increases.
C)   long-run average total costs are increasing as output increases.
D)   marginal costs are equal to average total costs for all levels of output.E) A) and B)
F) None of the above

Exam 12: The Costs of Production

An example of an explicit cost for the owner of a tattoo parlor would be the wages that she could earn if she worked as a graphic artist for an advertising agency.

Correct Answer
verified

If the marginal cost of producing the tenth unit of output is $2.50,and if the average total cost of producing the tenth unit of output is $3,then at ten units of output,average total cost is rising.

Correct Answer
verified

Table 12-8 -Refer to Table 12-8.What is the average variable cost of producing 5 units of output?

Correct Answer
verified

When a firm's long-run average total costs do not vary as output increases,the firm exhibits

Correct Answer
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B

In the long run Firm A incurs total costs of $1,200 when output is 30 units and $1,600 when output is 40 units.Firm A exhibits

Correct Answer
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If Franco's Pizza Parlor knows that the marginal cost of the 500^th pizza is $3.50 and that the average total cost of making 499 pizzas is $3.30,then

Correct Answer
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Which of the following can be added to profit to obtain total revenue?

Correct Answer
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D

The fundamental reason that marginal cost eventually rises as output increases is because of

Correct Answer
verified

Anna borrows $5,000 from a bank and withdraws $1,000 from her personal savings to start a coffee shop.The interest rate is 5 percent for both the bank loan and her personal savings.Her opportunity cost of capital is $250.

Correct Answer
verified

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

Correct Answer
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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.Average fixed cost will be

Correct Answer
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Industrial organization is the study of how

Correct Answer
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Assume Jack received all As in his classes last semester.If Jack gets all Bs in his classes this semester,his GPA may or may not fall.

Correct Answer
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True

The amount by which total cost rises when the firm produces one additional unit of output is called

Correct Answer
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Correct Answer
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Table 12-4 Charles's Math Tutoring -Refer to Table 12-4.What is the marginal product of the third worker?

Correct Answer
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Table 12-15 Consider the following table of long-run total cost for four different firms: -Refer to Table 12-13.Firm 1's efficient scale occurs at what quantity?

Correct Answer
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When average cost is greater than marginal cost,marginal cost must be

Correct Answer
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Economies of scale occur when a firm's

Correct Answer
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Exam 12: The Costs of Production

An example of an explicit cost for the owner of a tattoo parlor would be the wages that she could earn if she worked as a graphic artist for an advertising agency.

Correct AnswerverifiedShow Answer

If the marginal cost of producing the tenth unit of output is $2.50,and if the average total cost of producing the tenth unit of output is $3,then at ten units of output,average total cost is rising.

Correct AnswerverifiedShow Answer

Table 12-8 -Refer to Table 12-8.What is the average variable cost of producing 5 units of output?

Correct AnswerverifiedShow Answer

When a firm's long-run average total costs do not vary as output increases,the firm exhibits

Correct AnswerverifiedB

In the long run Firm A incurs total costs of $1,200 when output is 30 units and $1,600 when output is 40 units.Firm A exhibits

Correct AnswerverifiedShow Answer

If Franco's Pizza Parlor knows that the marginal cost of the 500th pizza is $3.50 and that the average total cost of making 499 pizzas is $3.30,then

Correct AnswerverifiedShow Answer

Which of the following can be added to profit to obtain total revenue?

Correct AnswerverifiedD

The fundamental reason that marginal cost eventually rises as output increases is because of

Correct AnswerverifiedShow Answer

Anna borrows $5,000 from a bank and withdraws $1,000 from her personal savings to start a coffee shop.The interest rate is 5 percent for both the bank loan and her personal savings.Her opportunity cost of capital is $250.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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.Average fixed cost will be

Correct AnswerverifiedShow Answer

Industrial organization is the study of how

Correct AnswerverifiedShow Answer

Assume Jack received all As in his classes last semester.If Jack gets all Bs in his classes this semester,his GPA may or may not fall.

Correct AnswerverifiedTrue

The amount by which total cost rises when the firm produces one additional unit of output is called

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 12-4 Charles's Math Tutoring -Refer to Table 12-4.What is the marginal product of the third worker?

Correct AnswerverifiedShow Answer

Table 12-15 Consider the following table of long-run total cost for four different firms: -Refer to Table 12-13.Firm 1's efficient scale occurs at what quantity?

Correct AnswerverifiedShow Answer

When average cost is greater than marginal cost,marginal cost must be

Correct AnswerverifiedShow Answer

Economies of scale occur when a firm's

Correct AnswerverifiedShow Answer

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B

Correct Answer
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If Franco's Pizza Parlor knows that the marginal cost of the 500^th pizza is $3.50 and that the average total cost of making 499 pizzas is $3.30,then

Correct Answer
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D

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True

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