Question 1

Figure 13-5 
-Refer to Figure 13-5.Which of the curves is most likely to represent average fixed cost?

Accepted Answer

A)   A
B)   B
C)   C
D)   DE) B) and D)
F) A) and D)

Question 2

In the long run Willie's Chocolate Factory incurs total costs of $2,500 when output is 1,250 units and $2,750 when output is 1,500 units.For this range of output,Willie's exhibits

Accepted Answer

A)   economies of scale.
B)   constant returns to scale.
C)   diseconomies of scale.
D)   efficient scale.E) None of the above
F) B) and C)

Question 3

There is general agreement among economists that the long-run time period exceeds one year.

Accepted Answer

A) True 
 B)False

Question 4

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 5

Table 13-1
 
-Refer to Table 13-1.The average variable cost of producing 240 units is

Accepted Answer

A)   $0.13.
B)   $0.19.
C)   $0.32.
D)   $0.80.E) All of the above
F) B) and C)

Question 6

Some costs do not vary with the quantity of output produced.Those costs are called

Accepted Answer

A)   marginal costs.
B)   average costs.
C)   fixed costs.
D)   explicit costs.E) C) and D)
F) A) and D)

Question 7

Table 13-4
Charles's Math Tutoring
 
-Refer to Table 13-4.Suppose that Charles's math tutoring company has a fixed cost of $50 per month for his cell phone.Each worker costs Charles $60 per day.As output increases from 0 to 45 students,Charles's total cost curve

Accepted Answer

A)   increases but gets flatter.
B)   increases and gets steeper.
C)   decreases and gets flatter.
D)   decreases but gets steeper.E) A) and B)
F) A) and C)

Question 8

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) A) and B)
F) A) and C)

Question 9

For a firm,the production function represents the relationship between

Accepted Answer

A)   implicit costs and explicit costs.
B)   quantity of inputs and total cost.
C)   quantity of inputs and quantity of output.
D)   quantity of output and total cost.E) B) and D)
F) A) and B)

Question 10

How would a production function that exhibits decreasing marginal product affect the shape of the total cost curve? Explain or draw a graph.

Accepted Answer

The total cost curve will incr...

Question 11

Which of the following measures of cost is best described as "the cost of a typical unit of output if total cost is divided evenly over all the units produced?"

Accepted Answer

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

Question 12

Let L represent the number of workers hired by a firm,and let Q represent that firm's quantity of output.Assume two points on the firm's production function are (L = 12,Q = 122) and (L = 13,Q = 132) .Then the marginal product of the 13th worker is

Accepted Answer

A)   8 units of output.
B)   10 units of output.
C)   122 units of output.
D)   132 units of output.E) A) and D)
F) A) and B)

Question 13

Average total cost tells us the

Accepted Answer

A)   total cost of the first unit of output,if total cost is divided evenly over all the units produced.
B)   cost of a typical unit of output,if total cost is divided evenly over all the units produced.
C)   cost of the last unit of output,if total cost does not include a fixed cost component.
D)   variable cost of a firm that is producing at least one unit of output.E) B) and C)
F) None of the above

Question 14

Suppose that a firm's long-run average total costs of producing televisions decreases as it produces between 10,000 and 20,000 televisions.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)   coordination problems.E) B) and C)
F) B) and D)

Question 15

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 16

When calculating a firm's profit,an economist will subtract only

Accepted Answer

A)   explicit costs from total revenue because these are the only costs that can be measured explicitly.
B)   implicit costs from total revenue because these include both the costs that can be directly measured as well as the costs that can be indirectly measured.
C)   the opportunity costs from total revenue because these include both the implicit and explicit costs of the firm.
D)   the marginal cost because the cost of the next unit is the only relevant cost.E) B) and D)
F) B) and C)

Question 17

Figure 13-9
The figure below depicts average total cost functions for a firm that produces automobiles. 
-Refer to Figure 13-9.At levels of output less than M,the firm experiences

Accepted Answer

A)   economies of scale.
B)   diseconomies of scale.
C)   constant returns to scale.
D)   both diminishing marginal productivity and coordination problems.E) A) and B)
F) A) and C)

Question 18

If long-run average total cost is rising,then the firm is experiencing economies of scale.

Accepted Answer

A) True 
 B)False

Question 19

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 C)
F) A) and D)

Question 20

If marginal cost is equal to average total cost,then

Accepted Answer

A)   marginal cost is minimized.
B)   average total cost is minimized.
C)   average variable cost is minimized.
D)   marginal cost is zero.E) None of the above
F) A) and B)

Exam 13: The Costs of Production

Figure 13-5 -Refer to Figure 13-5.Which of the curves is most likely to represent average fixed cost?

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How would a production function that exhibits decreasing marginal product affect the shape of the total cost curve? Explain or draw a graph.

Correct AnswerverifiedThe total cost curve will incr...View AnswerShow Answer

Let L represent the number of workers hired by a firm,and let Q represent that firm's quantity of output.Assume two points on the firm's production function are (L = 12,Q = 122) and (L = 13,Q = 132) .Then the marginal product of the 13th worker is

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Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9.At levels of output less than M,the firm experiences

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Some costs do not vary with the quantity of output produced.Those costs are called

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

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

Suppose that a firm's long-run average total costs of producing televisions decreases as it produces between 10,000 and 20,000 televisions.For this range of output,the firm is experiencing

Correct AnswerverifiedShow Answer

Average total cost tells us the

Correct AnswerverifiedShow Answer

Which of the following measures of cost is best described as "the cost of a typical unit of output if total cost is divided evenly over all the units produced?"

Correct AnswerverifiedShow Answer

If long-run average total cost is rising,then the firm is experiencing economies of scale.

Correct AnswerverifiedShow Answer

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

For a firm,the production function represents the relationship between

Correct AnswerverifiedShow Answer

If marginal cost is equal to average total cost,then

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There is general agreement among economists that the long-run time period exceeds one year.

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Table 13-4 Charles's Math Tutoring -Refer to Table 13-4.Suppose that Charles's math tutoring company has a fixed cost of $50 per month for his cell phone.Each worker costs Charles $60 per day.As output increases from 0 to 45 students,Charles's total cost curve

Correct AnswerverifiedShow Answer

In the long run Willie's Chocolate Factory incurs total costs of $2,500 when output is 1,250 units and $2,750 when output is 1,500 units.For this range of output,Willie's exhibits

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

Table 13-1 -Refer to Table 13-1.The average variable cost of producing 240 units is

Correct AnswerverifiedShow Answer

When calculating a firm's profit,an economist will subtract only

Correct AnswerverifiedShow Answer

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The total cost curve will incr...
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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

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