Question 1

When marginal cost is less than average total cost,

Accepted Answer

A)  marginal cost must be falling.
B)  average variable cost must be falling.
C)  average total cost is falling.
D)  average total cost is rising.E) All of the above
F) None of the above

Question 2

-Refer to Table 13-4. 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 B)
F) All of the above

Question 3

What might cause economies of scale?

Accepted Answer

specializa...

Question 4

Table 13-7
The Flying Elvis Copter Rides 
-Refer to Table 13-7. What is the value of J?

Accepted Answer

A)  $25
B)  $50
C)  $110
D)  $220E) A) and D)
F) B) and D)

Question 5

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 implicit costs will equal

Accepted Answer

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

Question 6

Table 13-20
Listed in the table are the long-run total costs for three different firms. 
-Refer to Table 13-20. Firm A is experiencing economies of scale.

Accepted Answer

A) True 
 B)False

Question 7

The average-total-cost curve reflects the shape of both the average-fixed-cost and average-variable-cost curves.

Accepted Answer

A) True 
 B)False

Question 8

Table 13-17
Consider the following table of long-run total cost for four different firms: 
-Refer to Table 13-17. Firm 4's efficient scale occurs at what quantity?

Accepted Answer

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

Question 9

At low levels of production, the firm

Accepted Answer

A)  benefits from increased size because it can take advantage of greater specialization.
B)  has the potential for economies of scale.
C)  is unlikely to experiences acute problems with coordination.
D)  All of the above are correct.E) A) and B)
F) C) and D)

Question 10

Figure 13-2 
-Refer to Figure 13-2. 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 at an increasing rate.
D)  total output decreases.E) A) and D)
F) None of the above

Question 11

A key difference between accountants and economists is their different treatment of the cost of capital. Does this cause an accountant's estimate of total costs to be higher or lower than an economist's estimate? Explain.

Accepted Answer

An accountant would not include the forg...

Question 12

Table 13-5 
-Refer to Table 13-5. Assume that fixed costs are $500, and variable costs are $100 per worker. For this firm, what are the shapes of the production function and the total-cost curve?

Accepted Answer

A)  Both the production function and total-cost curve are increasing at an increasing rate.
B)  Both the production function and total-cost curve are increasing at a decreasing rate.
C)  The production function is increasing at an increasing rate, whereas the total-cost function is increasing at a decreasing rate.
D)  The production function is increasing at a decreasing rate, whereas the total-cost function is increasing at an increasing rate.E) B) and D)
F) A) and B)

Question 13

Which of the following statements is correct?

Accepted Answer

A)  If marginal cost is rising, then average total cost is rising.
B)  If marginal cost is rising, then average variable cost is rising.
C)  If average variable cost is rising, then marginal cost is minimized.
D)  If average total cost is rising, then marginal cost is greater than average total cost.E) None of the above
F) A) and B)

Question 14

Scenario 13-14
If Farmer Brown plants no seeds on his farm, he gets no harvest. If he plants 1 bag of seeds, he gets 5 bushels of wheat. If he plants 2 bags, he gets 9 bushels. If he plants 3 bags, he gets 12 bushels. A bag of seeds costs $120, and seeds are his only cost.
-Refer to Scenario 13-14. Farmer Brown's total-cost curve is

Accepted Answer

A)  increasing at an increasing rate.
B)  increasing at a decreasing rate.
C)  increasing at a constant rate.
D)  decreasing.E) A) and C)
F) A) and B)

Question 15

Scenario 13-16
Barney builds custom wooden birdhouses. He can make 150 birdhouses per month and sell them for $50 each. His average total cost is $30 per birdhouse.
-Refer to Scenario 13-16. Barney's monthly total revenue is

Accepted Answer

A)  $12,000.
B)  $7,500.
C)  $4,500.
D)  $1,500.E) A) and C)
F) B) and C)

Question 16

When average total cost is above marginal cost, average total cost is rising.

Accepted Answer

A) True 
 B)False

Question 17

A firm produces 400 units of output at a total cost of $1,200. If total variable costs are $1,000,

Accepted Answer

A)  average fixed cost is 50 cents.
B)  average variable cost is $2.
C)  average total cost is $2.50.
D)  average total cost is 50 cents.E) C) and D)
F) B) and D)

Question 18

Scenario 13-11
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 13-11. An economist would calculate the total profit for one birdhouse to be

Accepted Answer

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

Question 19

Suppose Jan started up a small lemonade stand business last month. Variable costs for Jan's lemonade stand now include the cost of

Accepted Answer

A)  lemons and sugar.
B)  paper cups.
C)  the wages paid to her hourly workers.
D)  All of the above are correct.E) A) and D)
F) C) and D)

Question 20

A firm that produces and sells furniture gets to choose

Accepted Answer

A)  how many workers to hire in both the short run and the long run.
B)  the size of its factories in the short run but not in the long run.
C)  which short-run average-total-cost curve to use in both the short tun and the long run.
D)  All of the above are correct.E) B) and D)
F) None of the above

Exam 13: The Costs of Production

A firm that produces and sells furniture gets to choose

Correct Answer
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At low levels of production, the firm

Correct Answer
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Figure 13-2 -Refer to Figure 13-2. As the number of workers increases,

Correct Answer
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Correct Answer
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A key difference between accountants and economists is their different treatment of the cost of capital. Does this cause an accountant's estimate of total costs to be higher or lower than an economist's estimate? Explain.

Correct Answer
verified
An accountant would not include the forg...
View Answer

When marginal cost is less than average total cost,

Correct Answer
verified

A firm produces 400 units of output at a total cost of $1,200. If total variable costs are $1,000,

Correct Answer
verified

The average-total-cost curve reflects the shape of both the average-fixed-cost and average-variable-cost curves.

Correct Answer
verified

Suppose Jan started up a small lemonade stand business last month. Variable costs for Jan's lemonade stand now include the cost of

Correct Answer
verified

Table 13-20 Listed in the table are the long-run total costs for three different firms. -Refer to Table 13-20. Firm A is experiencing economies of scale.

Correct Answer
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Table 13-5 -Refer to Table 13-5. Assume that fixed costs are $500, and variable costs are $100 per worker. For this firm, what are the shapes of the production function and the total-cost curve?

Correct Answer
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Correct Answer
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-Refer to Table 13-4. What is the marginal product of the third worker?

Correct Answer
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When average total cost is above marginal cost, average total cost is rising.

Correct Answer
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Correct Answer
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What might cause economies of scale?

Correct Answer
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specializa...
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Table 13-7 The Flying Elvis Copter Rides -Refer to Table 13-7. What is the value of J?

Correct Answer
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Which of the following statements is correct?

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Scenario 13-16 Barney builds custom wooden birdhouses. He can make 150 birdhouses per month and sell them for $50 each. His average total cost is $30 per birdhouse. -Refer to Scenario 13-16. Barney's monthly total revenue is

Correct Answer
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Table 13-17 Consider the following table of long-run total cost for four different firms: -Refer to Table 13-17. Firm 4's efficient scale occurs at what quantity?

Correct Answer
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Exam 13: The Costs of Production

A firm that produces and sells furniture gets to choose

Correct AnswerverifiedShow Answer

At low levels of production, the firm

Correct AnswerverifiedShow Answer

Figure 13-2 -Refer to Figure 13-2. As the number of workers increases,

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A key difference between accountants and economists is their different treatment of the cost of capital. Does this cause an accountant's estimate of total costs to be higher or lower than an economist's estimate? Explain.

Correct AnswerverifiedAn accountant would not include the forg...View AnswerShow Answer

When marginal cost is less than average total cost,

Correct AnswerverifiedShow Answer

A firm produces 400 units of output at a total cost of $1,200. If total variable costs are $1,000,

Correct AnswerverifiedShow Answer

The average-total-cost curve reflects the shape of both the average-fixed-cost and average-variable-cost curves.

Correct AnswerverifiedShow Answer

Suppose Jan started up a small lemonade stand business last month. Variable costs for Jan's lemonade stand now include the cost of

Correct AnswerverifiedShow Answer

Table 13-20 Listed in the table are the long-run total costs for three different firms. -Refer to Table 13-20. Firm A is experiencing economies of scale.

Correct AnswerverifiedShow Answer

Table 13-5 -Refer to Table 13-5. Assume that fixed costs are $500, and variable costs are $100 per worker. For this firm, what are the shapes of the production function and the total-cost curve?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

-Refer to Table 13-4. What is the marginal product of the third worker?

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When average total cost is above marginal cost, average total cost is rising.

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Correct AnswerverifiedShow Answer

What might cause economies of scale?

Correct Answerverifiedspecializa...View AnswerShow Answer

Table 13-7 The Flying Elvis Copter Rides -Refer to Table 13-7. What is the value of J?

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

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Scenario 13-16 Barney builds custom wooden birdhouses. He can make 150 birdhouses per month and sell them for $50 each. His average total cost is $30 per birdhouse. -Refer to Scenario 13-16. Barney's monthly total revenue is

Correct AnswerverifiedShow Answer

Table 13-17 Consider the following table of long-run total cost for four different firms: -Refer to Table 13-17. Firm 4's efficient scale occurs at what quantity?

Correct AnswerverifiedShow Answer

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An accountant would not include the forg...
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specializa...
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