Question 1

Scenario 13-5
A stationery firm produces and sells staplers.Last year, it produced 5000 staplers and sold each stapler for $10.In producing the 5000 staplers, it incurred variable costs of $25,000 and a total cost of $45,000.
-Refer to Scenario 13-5.In producing the 5000 staplers,what was the firm's average fixed cost

Accepted Answer

A)  $3
B)  $4
C)  $5
D)  $6E) A) and B)
F) A) and C)

Question 2

Suppose a certain firm is able to produce 160 units of output per day when 15 workers are hired.The firm is able to produce 178 units of output per day when 16 workers are hired (holding other inputs fixed) .What is the marginal product of the 16th worker

Accepted Answer

A)  10 units of output
B)  11 units of output
C)  18 units of output
D)  176 units of outputE) All of the above
F) C) and D)

Question 3

Total cost can be divided into two types.What are those two types

Accepted Answer

A)  fixed costs and variable costs
B)  fixed costs and marginal costs
C)  variable costs and marginal costs
D)  average costs and marginal costsE) A) and B)
F) C) and D)

Question 4

What property does the long-run average-total-cost curve have

Accepted Answer

A)  It is flatter than the short-run average-total-cost curve, but not necessarily horizontal.
B)  It is horizontal.
C)  It is always falling as output increases.
D)  It is always rising as output increases.E) C) and D)
F) All of the above

Question 5

Figure 13-5
This figure depicts average total cost functions for a firm that produces automobiles.
 
-Refer to Figure 13-5.At what output levels does this firm experience diseconomies of scale

Accepted Answer

A)  output levels below M
B)  output levels between M and N
C)  output levels at N
D)  output levels above NE) B) and D)
F) B) and C)

Question 6

Which of the following explains the relationship among different cost functions

Accepted Answer

A)  The marginal cost of the fifth unit of output equals the total fixed cost of five units minus the total fixed cost of four units.
B)  The total variable cost of seven units equals the average variable cost of seven units divided by seven.
C)  The average total cost of seven units equals the average variable cost of the seven units minus the average fixed cost of seven units.
D)  The marginal cost of the fifth unit of output equals the total variable cost of five units minus the total variable cost of four units.E) A) and B)
F) A) and C)

Question 7

At what level of output will average total cost increase

Accepted Answer

A)  when marginal cost equals average total cost
B)  when marginal cost is greater than average total cost
C)  when marginal cost equals average variable cost
D)  when marginal cost is lower than average variable costE) B) and C)
F) A) and B)

Question 8

Which of the following situations does a firm have when long-run average total cost decreases as the quantity of output increases

Accepted Answer

A)  economies of scale
B)  diseconomies of scale
C)  coordination problems arising from the large size of the firm
D)  fixed costs greatly exceeding variable costsE) A) and C)
F) B) and D)

Question 9

Susan used to work as a telemarketer,earning $25,000 per year.She gave up that job to start a catering business.In calculating the economic profit of her catering business,how is the $25,000 income that she gave up counted in terms of the catering business

Accepted Answer

A)  direct costs
B)  opportunity costs
C)  explicit costs
D)  sunk costsE) All of the above
F) A) and B)

Question 10

Table 13-2 
-Refer to Table 13-2.What is the marginal product (MP)  of the second worker

Accepted Answer

A)  110
B)  200
C)  260
D)  330E) A) and B)
F) A) and C)

Question 11

When average total cost rises if a producer either increases or decreases production,then the firm is said to be operating at efficient scale.

Accepted Answer

A) True 
 B)False

Question 12

Table 13-2 
-Refer to Table 13-2.What is the total cost associated with making 890 boxes of premium chocolates per week

Accepted Answer

A)  $1250
B)  $1350
C)  $1400
D)  $1575E) B) and C)
F) A) and D)

Question 13

Table 13-2 
-Refer to Table 13-2.One week,Adrianne earns a profit of $125.If her revenue for the week is $100,how many boxes of chocolate did she produce

Accepted Answer

A)  140
B)  330
C)  780
D)  950E) C) and D)
F) A) and D)

Question 14

What is the marginal product of an input in the production process

Accepted Answer

A)  the increase in total revenue obtained from an additional unit of that input
B)  the increase in profit obtained from an additional unit of that input
C)  the increase in total profit obtained from an additional unit of that input
D)  the increase in quantity of output obtained from an additional unit of that inputE) A) and B)
F) B) and D)

Question 15

When is marginal cost equal to average total cost

Accepted Answer

A)  when average variable cost is falling
B)  when average fixed cost is rising
C)  when marginal cost is at its minimum
D)  when average total cost is at its minimumE) All of the above
F) B) and C)

Question 16

When do constant returns to scale occur

Accepted Answer

A)  when long-run total costs are constant as output increases
B)  when long-run average total costs are constant as output increases
C)  when the firm's long-run average-cost curve is falling as output increases
D)  when the firm's long-run average-cost curve is rising as output increasesE) B) and D)
F) B) and C)

Question 17

Table 13-5 
At Bob’s Baseball Factory, Bob pays all his workers the same wage and labour is his only variable cost. Consider the following information about baseball production at Bob’s Baseball Factory:

-From the information in Table 13-5,what can we conclude about Bob's average variable cost

Accepted Answer

A)  It decreases as output rises from 0 to 10, but rises after that.
B)  It decreases as output rises from 0 to 26, but rises after that.
C)  It decreases as output rises from 0 to 33, but increases after that.
D)  It decreases continually as output rises.E) A) and B)
F) B) and C)

Question 18

Diseconomies of scale often arise because higher production levels allow specialization among workers.

Accepted Answer

A) True 
 B)False

Question 19

When do economies of scale arise

Accepted Answer

A)  when an economy is self-sufficient in production
B)  when individuals in a society make purchases due to a current trend
C)  when fixed costs are large relative to variable costs
D)  when workers are able to specialize in a particular taskE) None of the above
F) A) and B)

Question 20

Although economists and accountants treat many costs differently,they both treat the cost of capital the same.

Accepted Answer

A) True 
 B)False

Exam 13: The Costs of Production

Table 13-2 -Refer to Table 13-2.One week,Adrianne earns a profit of $125.If her revenue for the week is $100,how many boxes of chocolate did she produce

Correct Answer
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When do economies of scale arise

Correct Answer
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Table 13-2 -Refer to Table 13-2.What is the total cost associated with making 890 boxes of premium chocolates per week

Correct Answer
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Figure 13-5 This figure depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-5.At what output levels does this firm experience diseconomies of scale

Correct Answer
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What property does the long-run average-total-cost curve have

Correct Answer
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Susan used to work as a telemarketer,earning $25,000 per year.She gave up that job to start a catering business.In calculating the economic profit of her catering business,how is the $25,000 income that she gave up counted in terms of the catering business

Correct Answer
verified

Table 13-5 At Bob’s Baseball Factory, Bob pays all his workers the same wage and labour is his only variable cost. Consider the following information about baseball production at Bob’s Baseball Factory: -From the information in Table 13-5,what can we conclude about Bob's average variable cost

Correct Answer
verified

Although economists and accountants treat many costs differently,they both treat the cost of capital the same.

Correct Answer
verified

Table 13-2 -Refer to Table 13-2.What is the marginal product (MP) of the second worker

Correct Answer
verified

When is marginal cost equal to average total cost

Correct Answer
verified

Diseconomies of scale often arise because higher production levels allow specialization among workers.

Correct Answer
verified

What is the marginal product of an input in the production process

Correct Answer
verified

Total cost can be divided into two types.What are those two types

Correct Answer
verified

When average total cost rises if a producer either increases or decreases production,then the firm is said to be operating at efficient scale.

Correct Answer
verified

Which of the following situations does a firm have when long-run average total cost decreases as the quantity of output increases

Correct Answer
verified

Which of the following explains the relationship among different cost functions

Correct Answer
verified

When do constant returns to scale occur

Correct Answer
verified

Suppose a certain firm is able to produce 160 units of output per day when 15 workers are hired.The firm is able to produce 178 units of output per day when 16 workers are hired (holding other inputs fixed) .What is the marginal product of the 16th worker

Correct Answer
verified

Correct Answer
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At what level of output will average total cost increase

Correct Answer
verified

Exam 13: The Costs of Production

Table 13-2 -Refer to Table 13-2.One week,Adrianne earns a profit of $125.If her revenue for the week is $100,how many boxes of chocolate did she produce

Correct AnswerverifiedShow Answer

When do economies of scale arise

Correct AnswerverifiedShow Answer

Table 13-2 -Refer to Table 13-2.What is the total cost associated with making 890 boxes of premium chocolates per week

Correct AnswerverifiedShow Answer

Figure 13-5 This figure depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-5.At what output levels does this firm experience diseconomies of scale

Correct AnswerverifiedShow Answer

What property does the long-run average-total-cost curve have

Correct AnswerverifiedShow Answer

Susan used to work as a telemarketer,earning $25,000 per year.She gave up that job to start a catering business.In calculating the economic profit of her catering business,how is the $25,000 income that she gave up counted in terms of the catering business

Correct AnswerverifiedShow Answer

Table 13-5 At Bob’s Baseball Factory, Bob pays all his workers the same wage and labour is his only variable cost. Consider the following information about baseball production at Bob’s Baseball Factory: -From the information in Table 13-5,what can we conclude about Bob's average variable cost

Correct AnswerverifiedShow Answer

Although economists and accountants treat many costs differently,they both treat the cost of capital the same.

Correct AnswerverifiedShow Answer

Table 13-2 -Refer to Table 13-2.What is the marginal product (MP) of the second worker

Correct AnswerverifiedShow Answer

When is marginal cost equal to average total cost

Correct AnswerverifiedShow Answer

Diseconomies of scale often arise because higher production levels allow specialization among workers.

Correct AnswerverifiedShow Answer

What is the marginal product of an input in the production process

Correct AnswerverifiedShow Answer

Total cost can be divided into two types.What are those two types

Correct AnswerverifiedShow Answer

When average total cost rises if a producer either increases or decreases production,then the firm is said to be operating at efficient scale.

Correct AnswerverifiedShow Answer

Which of the following situations does a firm have when long-run average total cost decreases as the quantity of output increases

Correct AnswerverifiedShow Answer

Which of the following explains the relationship among different cost functions

Correct AnswerverifiedShow Answer

When do constant returns to scale occur

Correct AnswerverifiedShow Answer

Suppose a certain firm is able to produce 160 units of output per day when 15 workers are hired.The firm is able to produce 178 units of output per day when 16 workers are hired (holding other inputs fixed) .What is the marginal product of the 16th worker

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

At what level of output will average total cost increase

Correct AnswerverifiedShow Answer

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