Question 1

When trying to understand the decision making process of different firms, economists assume that people think at the margin.

Accepted Answer

A) True 
 B)False

Question 2

Specialisation among workers occurs when:

Accepted Answer

A)   each worker is allowed to perfect one particular task
B)   each worker is responsible for a number of different tasks
C)   quality management allows workers to switch from one task to another
D)   all of the above are trueE) B) and C)
F) A) and D)

Question 3

Graph 13-4
 A B)  ATCB C)  ATCC D)  any of the above" class="answers-bank-image d-inline" rel="preload" > This graph depicts average total cost functions for a firm that produces automobiles. Use the graph to answer the following question(s) .
-Refer to Graph 13-4. In the long run, the firm can operate on which of the following average total cost curves?

Accepted Answer

A)   ATCA
B)   ATCB
C)   ATCC
D)   any of the aboveE) None of the above
F) A) and C)

Question 4

Table 13-1
Measures of Cost for Splashy Cardboard Kayak Factory.
 
-Refer to Table 13-1. What is the variable cost of producing zero kayaks?

Accepted Answer

A)   $0
B)   $2
C)   $20
D)   it can't be determined from the information aboveE) C) and D)
F) B) and D)

Question 5

Harry Hoarder runs a small street vendor service which contracts to produce and sell moulded plastic souvenirs (key chains, commemorative plastic coins, plastic animals, etc.)  at small theatre shows. As owner of the firm, Harry must decide how much of each product to produce. The key element of this decision is:

Accepted Answer

A)   the fixed cost of production
B)   the cost of his selling booth
C)   how costs will vary as he changes the level of production
D)   the cost of book keeping servicesE) A) and C)
F) A) and B)

Question 6

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. With regard to cookie production, the figure implies:

Accepted Answer

A)   decreasing cost of cookie production
B)   diminishing marginal product of workers
C)   increasing marginal product of workers
D)   diminishing marginal cost of cookie productionE) A) and D)
F) B) and D)

Question 7

If the long-run average total cost curve is flat, then what does this imply about specialisation? What will be the firm's efficient scale?

Accepted Answer

If the long-run average total ...

Question 8

The marginal product of a firm's workers is revealed by the shape of the marginal cost curve.

Accepted Answer

A) True 
 B)False

Question 9

The amount of money that a firm pays to buy inputs is called:

Accepted Answer

A)   variable cost
B)   marginal cost
C)   fixed cost
D)   total costE) A) and C)
F) A) and D)

Question 10

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 marginal cost of producing the tenth bicycle in a given month?

Accepted Answer

A)   $300
B)   $304
C)   $321
D)   $340E) B) and C)
F) B) and D)

Question 11

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

Accepted Answer

A)   $2
B)   $11.50
C)   $3
D)   $4E) A) and B)
F) A) and C)

Question 12

Diminishing marginal product of labour means:

Accepted Answer

A)   the addition of an extra worker will reduce total output
B)   each new worker will output more than previous workers
C)   removing a worker will increase total output
D)   removing a worker will increase the marginal product of the remaining workersE) None of the above
F) B) and D)

Question 13

Dave is majoring in computer information development at University of Environmental Sustainability. While he has been attending university, Dave has started a computer consulting business to help local residents set up a local skill-sharing network. Dave charges $25 per hour for his consulting services. Dave also works five hours a week for the Arts Faculty to maintain its departmental web page. The Arts Faculty pays Dave $20 per hour. From this information we can conclude that:

Accepted Answer

A)   Dave should increase the number of hours he works for the Arts Faculty to make his income from it comparable to his consulting business income
B)   Dave is obviously not maximising his wellbeing if he continues to work for the Arts Faculty
C)   if Dave chooses one hour at the beach with his friends rather than spending one more hour with a consulting client, the forgone income of $20 is considered a cost of the choice to go to the beach
D)   if Dave chooses one hour at the beach with his friends rather than spending one more hour with a consulting client, the forgone income of $25 is considered a cost of the choice to go to the beachE) All of the above
F) B) and C)

Question 14

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 15

In the long run:

Accepted Answer

A)   variable inputs are rarely used
B)   variable inputs change to fixed inputs
C)   some inputs, such as plant and machinery, remain fixed
D)   all inputs are considered to be variableE) B) and C)
F) A) and D)

Question 16

If a firm mothballs a factory so that its output is zero, which of the following costs will also be zero?

Accepted Answer

A)   variable cost
B)   total cost
C)   average cost
D)   all of the aboveE) C) and D)
F) A) and D)

Question 17

When a factory is operating in the short run:

Accepted Answer

A)   total cost and variable cost are usually the same
B)   average fixed cost rises as output increases
C)   it cannot adjust the quantity of fixed inputs
D)   it cannot alter variable costsE) All of the above
F) None of the above

Question 18

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 fixed cost for the month if 10 bicycles are produced?

Accepted Answer

A)   $120
B)   $284.40
C)   $404.40
D)   $1200E) A) and D)
F) B) and D)

Question 19

Diseconomies of scale occur when:

Accepted Answer

A)   long-run average total costs rise as output increases
B)   long-run average total costs fall as output increases
C)   average fixed costs are falling
D)   average fixed costs are constantE) C) and D)
F) A) and B)

Question 20

Graph 13-2
  This graph depicts a total cost function for a firm that produces cookies. Use the graph to answer the following question(s) .
-Refer to Graph 13-2. Which of the statements below is most consistent with the shape of the total cost curve?

Accepted Answer

A)   producing additional cookies is equally costly, regardless of how many cookies are already being produced
B)   producing additional cookies becomes increasingly costly only when the number of cookies already being produced is large
C)   producing an additional cookie is always more costly than producing the previous cookie
D)   total production of cookies decreases with additional units of inputE) B) and D)
F) None of the above

Exam 13: The Costs of Production

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

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

If a firm mothballs a factory so that its output is zero, which of the following costs will also be zero?

Correct Answer
verified

Table 13-1 Measures of Cost for Splashy Cardboard Kayak Factory. -Refer to Table 13-1. What is the variable cost of producing zero kayaks?

Correct Answer
verified

Diminishing marginal product of labour means:

Correct Answer
verified

The marginal product of a firm's workers is revealed by the shape of the marginal cost curve.

Correct Answer
verified

Correct Answer
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When trying to understand the decision making process of different firms, economists assume that people think at the margin.

Correct Answer
verified

Graph 13-2 This graph depicts a total cost function for a firm that produces cookies. Use the graph to answer the following question(s) . -Refer to Graph 13-2. Which of the statements below is most consistent with the shape of the total cost curve?

Correct Answer
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Correct Answer
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In the long run:

Correct Answer
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The amount of money that a firm pays to buy inputs is called:

Correct Answer
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Diseconomies of scale occur when:

Correct Answer
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Correct Answer
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When a factory is operating in the short run:

Correct Answer
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Correct Answer
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If the long-run average total cost curve is flat, then what does this imply about specialisation? What will be the firm's efficient scale?

Correct Answer
verified
If the long-run average total ...
View 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. With regard to cookie production, the figure implies:

Correct Answer
verified

Specialisation among workers occurs when:

Correct Answer
verified

Graph 13-4 This graph depicts average total cost functions for a firm that produces automobiles. Use the graph to answer the following question(s) . -Refer to Graph 13-4. In the long run, the firm can operate on which of the following average total cost curves?

Correct Answer
verified

Exam 13: The Costs of Production

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

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

If a firm mothballs a factory so that its output is zero, which of the following costs will also be zero?

Correct AnswerverifiedShow Answer

Table 13-1 Measures of Cost for Splashy Cardboard Kayak Factory. -Refer to Table 13-1. What is the variable cost of producing zero kayaks?

Correct AnswerverifiedShow Answer

Diminishing marginal product of labour means:

Correct AnswerverifiedShow Answer

The marginal product of a firm's workers is revealed by the shape of the marginal cost curve.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When trying to understand the decision making process of different firms, economists assume that people think at the margin.

Correct AnswerverifiedShow Answer

Graph 13-2 This graph depicts a total cost function for a firm that produces cookies. Use the graph to answer the following question(s) . -Refer to Graph 13-2. Which of the statements below is most consistent with the shape of the total cost curve?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In the long run:

Correct AnswerverifiedShow Answer

The amount of money that a firm pays to buy inputs is called:

Correct AnswerverifiedShow Answer

Diseconomies of scale occur when:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When a factory is operating in the short run:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If the long-run average total cost curve is flat, then what does this imply about specialisation? What will be the firm's efficient scale?

Correct AnswerverifiedIf the long-run average total ...View AnswerShow 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. With regard to cookie production, the figure implies:

Correct AnswerverifiedShow Answer

Specialisation among workers occurs when:

Correct AnswerverifiedShow Answer

Graph 13-4 This graph depicts average total cost functions for a firm that produces automobiles. Use the graph to answer the following question(s) . -Refer to Graph 13-4. In the long run, the firm can operate on which of the following average total cost curves?

Correct AnswerverifiedShow Answer

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If the long-run average total ...
View Answer

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