Question 1

Carol Anne makes candles. If she charges $20 for each candle, her total revenue will be

Accepted Answer

A)   $1,000 if she sells 100 candles.
B)   $500 if she sells 25 candles.
C)   $20 regardless of how many candles she sells.
D)   $200 if she sells 5 candles.E) B) and C)
F) A) and C)

Question 2

Table 13-19 
-Refer to Table 13-19. What is the average total cost of producing 425 units of output?

Accepted Answer

ATC = TC/Q...

Question 3

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) B) and D)
F) B) and C)

Question 4

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

Question 5

Implicit costs are costs that do not require an outlay of money by the firm.

Accepted Answer

A) True 
 B)False

Question 6

Trevor's Tire Company produced and sold 500 tires. The average cost of production per tire was $50. Each tire sold for a price of $65. Trevor's Tire Company's total profits are

Accepted Answer

A)   $7,500.
B)   $25,000.
C)   $32,500.
D)   $67,500.E) B) and D)
F) A) and B)

Question 7

In some cases, specialization allows larger factories to produce goods at a lower average cost than smaller factories.

Accepted Answer

A) True 
 B)False

Question 8

When a firm is experiencing economies of scale, long-run

Accepted Answer

A)   average total cost is minimized.
B)   average total cost is greater than long-run marginal cost.
C)   average total cost is less than long-run marginal cost.
D)   marginal cost is minimized.E) B) and C)
F) All of the above

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Patrice owns a travel agency. Her accountant most likely includes which of the following costs on her financial statements?

Accepted Answer

A)   wages Patrice could earn giving tennis lessons
B)   dividends Patrice's money was earning in the stock market before Patrice sold her stock and leased the space for her travel agency
C)   the cost of utilities for operating the storefront
D)   Both b and c are correct.E) C) and D)
F) B) and C)

Question 11

The marginal-cost curve intersects the average-total-cost curve at the minimum point of the marginal-cost curve.

Accepted Answer

A) True 
 B)False

Question 12

If the marginal cost of producing the fifth unit of output is higher than the marginal cost of producing the fourth unit of output, then at five units of output, average total cost must be rising.

Accepted Answer

A) True 
 B)False

Question 13

Implicit costs

Accepted Answer

A)   do not require an outlay of money by the firm.
B)   do not enter into the economist's measurement of a firm's profit.
C)   are also known as variable costs.
D)   are not part of an economist's measurement of opportunity cost.E) B) and C)
F) A) and D)

Question 14

When comparing short-run average total cost with long-run average total cost at a given level of output,

Accepted Answer

A)   short-run average total cost is typically above long-run average total cost.
B)   short-run average total cost is typically the same as long-run average total cost.
C)   short-run average total cost is typically below long-run average total cost.
D)   the relationship between short-run and long-run average total cost follows no clear pattern.E) None of the above
F) A) and D)

Question 15

Table 13-19 
-Refer to Table 13-19. What is the shape of the marginal-cost curve?

Accepted Answer

MC = change in TC/change in Q, so althou...

Question 16

Table 13-1 
-Refer to Table 13-1. What is total output when 3 workers are hired?

Accepted Answer

A)   15
B)   60
C)   105
D)   135E) All of the above
F) B) and C)

Question 17

Suppose that a firm's long­run average total costs of producing small commuter jet airplanes increases as it produces between 2,000 and 4,000 airplanes. For this range of output, the firm is experiencing

Accepted Answer

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

Question 18

Table 13-17
Consider the following table of long-run total cost for four different firms: 
-Refer to Table 13-17. Which firm's long-run marginal cost decreases as output increases?

Accepted Answer

A)   Firm 1
B)   Firm 2
C)   Firm 3
D)   Firm 4E) None of the above
F) A) and D)

Question 19

In the long run a company that produces and sells dog beds incurs total costs of $1,200 when output is 30 beds and $1,600 when output is 40 beds. 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) A) and D)
F) A) and C)

Question 20

Scenario 13-9
Ellie has been working for an engineering firm and earning an annual salary of $80,000. She decides to open her own engineering business. Her annual expenses will include $15,000 for office rent, $3,000 for equipment rental, $1,000 for supplies, $1,200 for utilities, and a $35,000 salary for a secretary/bookkeeper. Ellie will cover her start-up expenses by cashing in a $20,000 certificate of deposit on which she was earning annual interest of $500.
-Refer to Scenario 13-9. Ellie's annual accounting costs will equal

Accepted Answer

A)   $55,200.
B)   $75,200.
C)   $80,500.
D)   $165,700.E) A) and B)
F) B) and C)

Exam 13: The Costs of Production

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

Correct Answer
verified

Economic profit

Correct Answer
verified

Patrice owns a travel agency. Her accountant most likely includes which of the following costs on her financial statements?

Correct Answer
verified

In some cases, specialization allows larger factories to produce goods at a lower average cost than smaller factories.

Correct Answer
verified

Correct Answer
verified

Implicit costs are costs that do not require an outlay of money by the firm.

Correct Answer
verified

In the long run a company that produces and sells dog beds incurs total costs of $1,200 when output is 30 beds and $1,600 when output is 40 beds. Firm A exhibits

Correct Answer
verified

Implicit costs

Correct Answer
verified

When a firm is experiencing economies of scale, long-run

Correct Answer
verified

Table 13-17 Consider the following table of long-run total cost for four different firms: -Refer to Table 13-17. Which firm's long-run marginal cost decreases as output increases?

Correct Answer
verified

Carol Anne makes candles. If she charges $20 for each candle, her total revenue will be

Correct Answer
verified

Suppose that a firm's longrun average total costs of producing small commuter jet airplanes increases as it produces between 2,000 and 4,000 airplanes. For this range of output, the firm is experiencing

Correct Answer
verified

If the marginal cost of producing the fifth unit of output is higher than the marginal cost of producing the fourth unit of output, then at five units of output, average total cost must be rising.

Correct Answer
verified

Economies of scale occur when a firm's

Correct Answer
verified

The marginal-cost curve intersects the average-total-cost curve at the minimum point of the marginal-cost curve.

Correct Answer
verified

Trevor's Tire Company produced and sold 500 tires. The average cost of production per tire was $50. Each tire sold for a price of $65. Trevor's Tire Company's total profits are

Correct Answer
verified

When comparing short-run average total cost with long-run average total cost at a given level of output,

Correct Answer
verified

Table 13-19 -Refer to Table 13-19. What is the shape of the marginal-cost curve?

Correct Answer
verified
MC = change in TC/change in Q, so althou...
View Answer

Table 13-1 -Refer to Table 13-1. What is total output when 3 workers are hired?

Correct Answer
verified

Table 13-19 -Refer to Table 13-19. What is the average total cost of producing 425 units of output?

Correct Answer
verified
ATC = TC/Q...
View Answer

Exam 13: The Costs of Production

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

Correct AnswerverifiedShow Answer

Economic profit

Correct AnswerverifiedShow Answer

Patrice owns a travel agency. Her accountant most likely includes which of the following costs on her financial statements?

Correct AnswerverifiedShow Answer

In some cases, specialization allows larger factories to produce goods at a lower average cost than smaller factories.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Implicit costs are costs that do not require an outlay of money by the firm.

Correct AnswerverifiedShow Answer

In the long run a company that produces and sells dog beds incurs total costs of $1,200 when output is 30 beds and $1,600 when output is 40 beds. Firm A exhibits

Correct AnswerverifiedShow Answer

Implicit costs

Correct AnswerverifiedShow Answer

When a firm is experiencing economies of scale, long-run

Correct AnswerverifiedShow Answer

Table 13-17 Consider the following table of long-run total cost for four different firms: -Refer to Table 13-17. Which firm's long-run marginal cost decreases as output increases?

Correct AnswerverifiedShow Answer

Carol Anne makes candles. If she charges $20 for each candle, her total revenue will be

Correct AnswerverifiedShow Answer

Suppose that a firm's long­run average total costs of producing small commuter jet airplanes increases as it produces between 2,000 and 4,000 airplanes. For this range of output, the firm is experiencing

Correct AnswerverifiedShow Answer

If the marginal cost of producing the fifth unit of output is higher than the marginal cost of producing the fourth unit of output, then at five units of output, average total cost must be rising.

Correct AnswerverifiedShow Answer

Economies of scale occur when a firm's

Correct AnswerverifiedShow Answer

The marginal-cost curve intersects the average-total-cost curve at the minimum point of the marginal-cost curve.

Correct AnswerverifiedShow Answer

Trevor's Tire Company produced and sold 500 tires. The average cost of production per tire was $50. Each tire sold for a price of $65. Trevor's Tire Company's total profits are

Correct AnswerverifiedShow Answer

When comparing short-run average total cost with long-run average total cost at a given level of output,

Correct AnswerverifiedShow Answer

Table 13-19 -Refer to Table 13-19. What is the shape of the marginal-cost curve?

Correct AnswerverifiedMC = change in TC/change in Q, so althou...View AnswerShow Answer

Table 13-1 -Refer to Table 13-1. What is total output when 3 workers are hired?

Correct AnswerverifiedShow Answer

Table 13-19 -Refer to Table 13-19. What is the average total cost of producing 425 units of output?

Correct AnswerverifiedATC = TC/Q...View AnswerShow Answer

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Suppose that a firm's longrun average total costs of producing small commuter jet airplanes increases as it produces between 2,000 and 4,000 airplanes. For this range of output, the firm is experiencing

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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MC = change in TC/change in Q, so althou...
View Answer

Correct Answer
verified

Correct Answer
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ATC = TC/Q...
View Answer