Question 1

What are opportunity costs? How do explicit and implicit costs relate to opportunity costs?

Accepted Answer

The opportunity cost of an ite...

Question 2

A second or third worker may have a higher marginal product than the first worker in certain circumstances.

Accepted Answer

A) True 
 B)False  True

Question 3

The marginal cost curve can rise even if the average total cost is falling.

Accepted Answer

A) True 
 B)False

Question 4

The marginal cost curve intersects the average variable cost curve at the minimum of the average variable cost curve.

Accepted Answer

A) True 
 B)False

Question 5

If a business is profitable from an accountant's point of view, then:

Accepted Answer

A)   it is always profitable from an economist's point of view
B)   it is never profitable from an economist's point of view
C)   economic profit will be higher than accounting profit
D)   we cannot say without more informationE) A) and B)
F) All of the above

Question 6

Opportunity costs are comprised of:

Accepted Answer

A)   explicit costs
B)   implicit costs
C)   forgone income
D)   all of the aboveE) A) and D)
F) All of the above D

Question 7

Graph 13-3
  The set of curves above reflect information about the cost structure of a firm. Use this graph to answer the following question(s) .
-Refer to Graph 13-3. Curve A is necessarily U-shaped because of:

Accepted Answer

A)   diminishing marginal product
B)   increasing marginal product
C)   the fact that decreasing marginal product follows increasing marginal product
D)   the fact that increasing marginal product follows decreasing marginal productE) A) and B)
F) None of the above C

Question 8

Table 13-3
Consider the following firm which makes high-performance racing bicycles. All costs are given in dollars. Output is shown on a monthly basis. The firm's fixed costs include a rent of $800 and a lease cost of $400 per month.
 
-Refer to Table 13-3. What is the average variable cost for the month if six bicycles are produced?

Accepted Answer

A)   $200
B)   $265
C)   $465
D)   $1590E) A) and C)
F) None of the above

Question 9

The long-run average total cost curve is:

Accepted Answer

A)   flatter than the short-run average total cost curve
B)   not U-shaped
C)   always decreasing as output increases
D)   always increasing as output increasesE) A) and B)
F) A) and C)

Question 10

If a firm wants to capitalise on economies of scale, it may be able to do so by:

Accepted Answer

A)   giving its employees a limited task that they can master
B)   employing a larger number of workers
C)   producing a larger quantity of output
D)   doing all of the aboveE) C) and D)
F) A) and D)

Question 11

Graph 13-1
  This graph depicts a production function for a firm that produces cookies. Use the
graph to answer the following question(s) .
-Refer to Graph 13-1. As the number of workers increases:

Accepted Answer

A)   total output increases, but at a decreasing rate
B)   marginal product increases but at a decreasing rate
C)   marginal product increases
D)   total output decreasesE) B) and D)
F) B) and C)

Question 12

Which of the following describes the marginal product of labour?

Accepted Answer

A)   the increase in labour necessary to generate a one-unit increase in output
B)   the increase in output obtained from a one-unit increase in labour
C)   the additional profit created with a one-unit increase in labour
D)   the additional cost created with a one-unit increase in labourE) A) and B)
F) None of the above

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

The cost of producing an additional unit of a good is not the same as the average cost of the good.

Accepted Answer

A) True 
 B)False

Question 15

Table 13-1
Measures of Cost for Splashy Cardboard Kayak Factory.
 
-Refer to Table 13-1. The average total cost of producing four kayaks is:

Accepted Answer

A)   $28
B)   $3.25
C)   $7
D)   it can't be determined from the above informationE) B) and D)
F) B) and C)

Question 16

Accounting profit is equal to:

Accepted Answer

A)   total revenue minus the explicit cost of producing goods and services
B)   total revenue minus the opportunity cost of producing goods and services
C)   average revenue minus the average cost of producing the last unit of a good or service
D)   marginal revenue minus marginal costE) None of the above
F) A) and B)

Question 17

If the average total cost curve is falling, what is necessarily true of the marginal cost curve? If the average total cost curve is rising, what is necessarily true of the marginal cost curve?

Accepted Answer

When the average total cost cu...

Question 18

Harry's Hotdogs is a small street vendor business owned by Harry Huggins. Harry is trying to get a better understanding of his costs by categorising them as fixed or variable. Which of the following costs are most likely to be considered fixed costs?

Accepted Answer

A)   hotdog buns
B)   mustard
C)   the cost of bookkeeping services
D)   wages paid to workers that sell hotdogsE) All of the above
F) A) and B)

Question 19

Average variable cost is equal to the quantity of output divided by the total variable cost.

Accepted Answer

A) True 
 B)False

Question 20

The amount of money that an orchardist could have earned if he had planted orange trees, rather than apple trees, is termed:

Accepted Answer

A)   explicit cost
B)   accounting cost
C)   implicit cost
D)   total salesE) All of the above
F) C) and D)

Exam 13: The Costs of Production

What are opportunity costs? How do explicit and implicit costs relate to opportunity costs?

Correct Answer
verified
The opportunity cost of an ite...
View Answer

A second or third worker may have a higher marginal product than the first worker in certain circumstances.

Correct Answer
verified
True

The marginal cost curve can rise even if the average total cost is falling.

Correct Answer
verified

The marginal cost curve intersects the average variable cost curve at the minimum of the average variable cost curve.

Correct Answer
verified

If a business is profitable from an accountant's point of view, then:

Correct Answer
verified

Opportunity costs are comprised of:

Correct Answer
verified
D

Graph 13-3 The set of curves above reflect information about the cost structure of a firm. Use this graph to answer the following question(s) . -Refer to Graph 13-3. Curve A is necessarily U-shaped because of:

Correct Answer
verified
C

Correct Answer
verified

The long-run average total cost curve is:

Correct Answer
verified

If a firm wants to capitalise on economies of scale, it may be able to do so by:

Correct Answer
verified

Graph 13-1 This graph depicts a production function for a firm that produces cookies. Use the graph to answer the following question(s) . -Refer to Graph 13-1. As the number of workers increases:

Correct Answer
verified

Which of the following describes the marginal product of labour?

Correct Answer
verified

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

Correct Answer
verified

The cost of producing an additional unit of a good is not the same as the average cost of the good.

Correct Answer
verified

Table 13-1 Measures of Cost for Splashy Cardboard Kayak Factory. -Refer to Table 13-1. The average total cost of producing four kayaks is:

Correct Answer
verified

Accounting profit is equal to:

Correct Answer
verified

If the average total cost curve is falling, what is necessarily true of the marginal cost curve? If the average total cost curve is rising, what is necessarily true of the marginal cost curve?

Correct Answer
verified
When the average total cost cu...
View Answer

Harry's Hotdogs is a small street vendor business owned by Harry Huggins. Harry is trying to get a better understanding of his costs by categorising them as fixed or variable. Which of the following costs are most likely to be considered fixed costs?

Correct Answer
verified

Average variable cost is equal to the quantity of output divided by the total variable cost.

Correct Answer
verified

The amount of money that an orchardist could have earned if he had planted orange trees, rather than apple trees, is termed:

Correct Answer
verified

Exam 13: The Costs of Production

What are opportunity costs? How do explicit and implicit costs relate to opportunity costs?

Correct AnswerverifiedThe opportunity cost of an ite...View AnswerShow Answer

A second or third worker may have a higher marginal product than the first worker in certain circumstances.

Correct AnswerverifiedTrue

The marginal cost curve can rise even if the average total cost is falling.

Correct AnswerverifiedShow Answer

The marginal cost curve intersects the average variable cost curve at the minimum of the average variable cost curve.

Correct AnswerverifiedShow Answer

If a business is profitable from an accountant's point of view, then:

Correct AnswerverifiedShow Answer

Opportunity costs are comprised of:

Correct AnswerverifiedD

Graph 13-3 The set of curves above reflect information about the cost structure of a firm. Use this graph to answer the following question(s) . -Refer to Graph 13-3. Curve A is necessarily U-shaped because of:

Correct AnswerverifiedC

Correct AnswerverifiedShow Answer

The long-run average total cost curve is:

Correct AnswerverifiedShow Answer

If a firm wants to capitalise on economies of scale, it may be able to do so by:

Correct AnswerverifiedShow Answer

Graph 13-1 This graph depicts a production function for a firm that produces cookies. Use the graph to answer the following question(s) . -Refer to Graph 13-1. As the number of workers increases:

Correct AnswerverifiedShow Answer

Which of the following describes the marginal product of labour?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The cost of producing an additional unit of a good is not the same as the average cost of the good.

Correct AnswerverifiedShow Answer

Table 13-1 Measures of Cost for Splashy Cardboard Kayak Factory. -Refer to Table 13-1. The average total cost of producing four kayaks is:

Correct AnswerverifiedShow Answer

Accounting profit is equal to:

Correct AnswerverifiedShow Answer

If the average total cost curve is falling, what is necessarily true of the marginal cost curve? If the average total cost curve is rising, what is necessarily true of the marginal cost curve?

Correct AnswerverifiedWhen the average total cost cu...View AnswerShow Answer

Harry's Hotdogs is a small street vendor business owned by Harry Huggins. Harry is trying to get a better understanding of his costs by categorising them as fixed or variable. Which of the following costs are most likely to be considered fixed costs?

Correct AnswerverifiedShow Answer

Average variable cost is equal to the quantity of output divided by the total variable cost.

Correct AnswerverifiedShow Answer

The amount of money that an orchardist could have earned if he had planted orange trees, rather than apple trees, is termed:

Correct AnswerverifiedShow Answer

Correct Answer
verified
The opportunity cost of an ite...
View Answer

Correct Answer
verified
True

Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
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D

Correct Answer
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C

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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When the average total cost cu...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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