Question 1

Answer the question on the basis of the following cost data.   Output  Average Fixed Cost  Average Variable Cost 1$50.00$100.00225.0080.00316.6766.67412.5065.00510.0068.0068.3773.3377.1480.0086.2587.50\begin{array} { | c | c | c | } \hline 	ext { Output } & 	ext { Average Fixed Cost } & 	ext { Average Variable Cost } \\hline 1 & \$ 50.00 & \$ 100.00 \\hline 2 & 25.00 & 80.00 \\hline 3 & 16.67 & 66.67 \\hline 4 & 12.50 & 65.00 \\hline 5 & 10.00 & 68.00 \\hline 6 & 8.37 & 73.33 \\hline 7 & 7.14 & 80.00 \\hline 8 & 6.25 & 87.50 \\hline\end{array} Output 12345678​ Average Fixed Cost $50.0025.0016.6712.5010.008.377.146.25​ Average Variable Cost $100.0080.0066.6765.0068.0073.3380.0087.50​​  The total cost of four units of output is

Accepted Answer

A)   $260.
B)   $77.50.
C)   $310.
D)   $215. E) A) and B)
F) None of the above

Question 2

Marginal product is

Accepted Answer

A)   the change in total output attributable to the employment of one more worker.
B)   the change in total revenue attributable to the employment of one more worker.
C)   the change in total cost attributable to the employment of one more worker.
D)   total product divided by the number of workers employed.E) A) and C)
F) All of the above

Question 3

Answer the question on the basis of the following output data for a firm. Assume that the amounts of all nonlabor resources are fixed.   Nuriber of Warkers  Units of Output 001402903126415051656180\begin{array} { |c | c| } \hline 	ext { Nuriber of Warkers } & 	ext { Units of Output } \\hline  \mathbf { 0 } &  \mathbf { 0 } \\hline 1 & 40 \\hline 2 &  \mathbf { 90} \\hline  \mathbf { 3 }&  \mathbf { 126 }\\hline 4 & 150 \\hline 5 & 165 \\hline  \mathbf { 6} &  \mathbf { 180} \\hline\end{array} Nuriber of Warkers 0123456​ Units of Output 04090126150165180​​  Average product is at a maximum when

Accepted Answer

A)   five workers are hired.
B)   four workers are hired.
C)   three workers are hired.
D)   two workers are hired. E) A) and C)
F) All of the above

Question 4

The following is cost information for the Creamy Crisp Donut Company. Entrepreneur's potential earnings as a salaried worker = $50,000 Annual lease on building = $22,000
Annual revenue from operations = $380,000 Payments to workers = $120,000
Utilities (electricity, water, disposal)  costs = $8,000
Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000 Entrepreneur's forgone interest on personal funds used to finance the business = $6,000
Creamy Crisp's implicit costs, including a normal profit, are

Accepted Answer

A)   $136,000.
B)   $150,000.
C)   $94,000.
D)   $156,000.E) All of the above
F) C) and D)

Question 5

The ABC Corporation decreases all of its inputs by 12 percent and finds that its output falls by only 8 percent. This means that initially it was producing

Accepted Answer

A)   in the range of diseconomies of scale.
B)   in the range of economies of scale.
C)   where AP is less than MP.
D)   at the point of minimum efficient scale.E) A) and B)
F) All of the above

Question 6

The short run is characterized by

Accepted Answer

A)   plenty of time for firms to either enter or leave the industry.
B)   increasing but not diminishing returns.
C)   fixed plant capacity.
D)   zero fixed costs.E) C) and D)
F) A) and D)

Question 7

Many people have turned to the Internet to get the news. This has caused the circulation numbers of newspapers to fall drastically, which in turn caused their

Accepted Answer

A)   average fixed costs to increase.
B)   average total costs to decrease.
C)   average fixed costs to decrease.
D)   marginal costs to increase.E) B) and C)
F) A) and D)

Question 8

To the economist, total cost includes

Accepted Answer

A)   explicit and implicit costs.
B)   neither implicit nor explicit costs.
C)   implicit, but not explicit, costs.
D)   explicit, but not implicit, costs.E) B) and C)
F) None of the above

Question 9

Over the range of output where the slope of the short-run total cost curve becomes steeper,

Accepted Answer

A)   fixed costs are increasing.
B)   marginal cost is increasing.
C)   marginal cost is positive but decreasing.
D)   marginal cost is lower than average variable cost.E) A) and D)
F) B) and D)

Question 10

(Consider This)  In order to apply the concept of diminishing returns to study time,

Accepted Answer

A)   the amount of study time available must be held constant.
B)   study time must be considered a long-run production process.
C)   all inputs to the learning process must be allowed to vary.
D)   all inputs to the learning process except for study time must be assumed to be fixed.E) B) and D)
F) A) and B)

Question 11

The table shows three short-run cost schedules for three plants of different sizes that a firm might build in the long run.  What is the long-run average cost of producing 30 units of output?

Accepted Answer

A)   $7
B)   $8
C)   $9
D)   $10E) All of the above
F) None of the above

Question 12

Suppose that you could either prepare your own tax return in 15 hours or hire a tax specialist to prepare it for you in 2 hours. You value your time at $11.00 an hour; the tax specialist will charge you $55 an hour. The opportunity cost of preparing your own tax return is

Accepted Answer

A)   $275.
B)   $55.
C)   $110.
D)   $165.E) A) and C)
F) C) and D)

Question 13

If economic profits in an industry are zero and implicit costs are greater than zero, then

Accepted Answer

A)   resources will move out of the industry.
B)   there will be no production in the short run.
C)   accounting profits are greater than zero.
D)   new firms will enter the industry.E) A) and B)
F) All of the above

Question 14

If a firm doubles its resource inputs and as a result output triples, then the long-run average cost curve must be upward-sloping.

Accepted Answer

A) True 
 B)False

Question 15

In the short run, total output in an industry

Accepted Answer

A)   is fixed at a specific level.
B)   can vary as the result of using a fixed amount of plant and equipment more or less intensively.
C)   may be altered by varying the size of plant and equipment which now exist in the industry.
D)   can vary as the result of new firms entering or leaving the industry.E) A) and C)
F) B) and D)

Question 16

In which of the following industries are economies of scale exhausted at relatively low levels of output?

Accepted Answer

A)   aircraft production
B)   automobile manufacturing
C)   concrete mixing
D)   newspaper printingE) C) and D)
F) B) and C)

Question 17

Answer the question on the basis of the following cost data.   Output  Total Cost 0$24133241348454561669\begin{array} { | c | c | } \hline 	ext { Output } & 	ext { Total Cost } \\hline \mathbf { 0 } & \mathbf { \$2 4 } \\hline 1 & 33 \\hline 2 & 41 \\hline 3 & 48 \\hline 4 & 54 \\hline 5 & 61 \\hline 6 & 69 \\hline\end{array} Output 0123456​ Total Cost $24334148546169​​  The total variable cost of producing 5 units is

Accepted Answer

A)   $61.
B)   $48.
C)   $37.
D)   $24. E) All of the above
F) C) and D)

Question 18

Which of the following is most likely to be a fixed cost?

Accepted Answer

A)   shipping charges
B)   property insurance premiums
C)   wages for unskilled labor
D)   expenditures for raw materialsE) B) and C)
F) C) and D)

Question 19

Which of the following types of firms are least likely to have their MC, AVC, and ATC curves affected by fluctuations in gasoline prices?

Accepted Answer

A)   firms like UPS that use a fleet of gasoline-powered vehicles
B)   taxi cab companies and Uber drivers
C)   companies that operate bus tours to popular vacation destinations
D)   firms like iTunes that distribute their products over the InternetE) A) and B)
F) A) and C)

Question 20

The Sunshine Corporation finds that its costs are $40 when it produces no output. Its total variable costs (TVC)  change with output as shown in the accompanying table. Use this information to answer the following question.   Output  TVC 1$302503654855110\begin{array}{|c|c|}\hline 	ext { Output } & 	ext { TVC } \\hline 1 & \$ 30 \\hline 2 & 50 \\hline 3 & 65 \\hline 4 & 85 \\hline 5 & 110 \\hline\end{array} Output 12345​ TVC $30506585110​​  The total cost of producing 3 units of output is

Accepted Answer

A)   $65.
B)   $105.
C)   $145.
D)   $185. E) All of the above
F) A) and B)

Exam 9: Businesses and the Costs of Production

Many people have turned to the Internet to get the news. This has caused the circulation numbers of newspapers to fall drastically, which in turn caused their

Correct Answer
verified

Correct Answer
verified

In which of the following industries are economies of scale exhausted at relatively low levels of output?

Correct Answer
verified

Which of the following is most likely to be a fixed cost?

Correct Answer
verified

The ABC Corporation decreases all of its inputs by 12 percent and finds that its output falls by only 8 percent. This means that initially it was producing

Correct Answer
verified

Suppose that you could either prepare your own tax return in 15 hours or hire a tax specialist to prepare it for you in 2 hours. You value your time at $11.00 an hour; the tax specialist will charge you $55 an hour. The opportunity cost of preparing your own tax return is

Correct Answer
verified

To the economist, total cost includes

Correct Answer
verified

(Consider This) In order to apply the concept of diminishing returns to study time,

Correct Answer
verified

Marginal product is

Correct Answer
verified

Correct Answer
verified

If a firm doubles its resource inputs and as a result output triples, then the long-run average cost curve must be upward-sloping.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Which of the following types of firms are least likely to have their MC, AVC, and ATC curves affected by fluctuations in gasoline prices?

Correct Answer
verified

In the short run, total output in an industry

Correct Answer
verified

The table shows three short-run cost schedules for three plants of different sizes that a firm might build in the long run. What is the long-run average cost of producing 30 units of output?

Correct Answer
verified

If economic profits in an industry are zero and implicit costs are greater than zero, then

Correct Answer
verified

The short run is characterized by

Correct Answer
verified

Over the range of output where the slope of the short-run total cost curve becomes steeper,

Correct Answer
verified

Correct Answer
verified

Exam 9: Businesses and the Costs of Production

Many people have turned to the Internet to get the news. This has caused the circulation numbers of newspapers to fall drastically, which in turn caused their

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In which of the following industries are economies of scale exhausted at relatively low levels of output?

Correct AnswerverifiedShow Answer

Which of the following is most likely to be a fixed cost?

Correct AnswerverifiedShow Answer

The ABC Corporation decreases all of its inputs by 12 percent and finds that its output falls by only 8 percent. This means that initially it was producing

Correct AnswerverifiedShow Answer

Suppose that you could either prepare your own tax return in 15 hours or hire a tax specialist to prepare it for you in 2 hours. You value your time at $11.00 an hour; the tax specialist will charge you $55 an hour. The opportunity cost of preparing your own tax return is

Correct AnswerverifiedShow Answer

To the economist, total cost includes

Correct AnswerverifiedShow Answer

(Consider This) In order to apply the concept of diminishing returns to study time,

Correct AnswerverifiedShow Answer

Marginal product is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If a firm doubles its resource inputs and as a result output triples, then the long-run average cost curve must be upward-sloping.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following types of firms are least likely to have their MC, AVC, and ATC curves affected by fluctuations in gasoline prices?

Correct AnswerverifiedShow Answer

In the short run, total output in an industry

Correct AnswerverifiedShow Answer

The table shows three short-run cost schedules for three plants of different sizes that a firm might build in the long run. What is the long-run average cost of producing 30 units of output?

Correct AnswerverifiedShow Answer

If economic profits in an industry are zero and implicit costs are greater than zero, then

Correct AnswerverifiedShow Answer

The short run is characterized by

Correct AnswerverifiedShow Answer

Over the range of output where the slope of the short-run total cost curve becomes steeper,

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified