Question 1

Cody builds mailboxes.If he charges $20 for each mailbox,his total revenue will be

Accepted Answer

A)   $1,000 if he sells 100 mailboxes.
B)   $500 if he sells 25 mailboxes.
C)   $20 regardless of how many mailboxes he sells.
D)   $200 if he sells 5 mailboxes.E) All of the above
F) B) and D)

Question 2

The minimum points of the average variable cost and average total cost curves occur where the

Accepted Answer

A)   marginal cost curve lies below the average variable cost and average total cost curves.
B)   marginal cost curve intersects those curves.
C)   average variable cost and average total cost curves intersect.
D)   slope of total cost is the smallest.E) A) and B)
F) A) and C)

Question 3

In the long run Firm A incurs total costs of $1,050 when output is 30 units and $1,200 when output is 40 units.Firm A exhibits

Accepted Answer

A)   diseconomies of scale because total cost is rising as output rises.
B)   diseconomies of scale because average total cost is rising as output rises.
C)   economies of scale because total cost is rising as output rises.
D)   economies of scale because average total cost is falling as output rises.E) All of the above
F) None of the above

Question 4

Table 12-11
Teacher's Helper is a small company that has a subcontract to produce instructional materials for disabled children in public school districts.The owner rents several small rooms in an office building in the suburbs for $600 a month and has leased computer equipment that costs $480 a month.
 
-Refer to Table 12-11.What is the average variable cost for the month if 6 instructional modules are produced?

Accepted Answer

A)   $180.00
B)   $533.33
C)   $700.00
D)   $713.33E) C) and D)
F) A) and B)

Question 5

Figure 12-8 
-Refer to Figure 12-8.The efficient scale of production occurs at which quantity?

Accepted Answer

A)   A
B)   B
C)   C
D)   DE) None of the above
F) B) and C)

Question 6

Adam Smith describes a visit to a car factory when discussing economies of scale in his book An Inquiry into the Nature and Causes of the Wealth of Nations.

Accepted Answer

A) True 
 B)False

Question 7

Table 12-3
 
-Refer to Table 12-3.The marginal product of the second worker is

Accepted Answer

A)   90 units.
B)   85 units.
C)   80 units.
D)   20 units.E) A) and B)
F) A) and D)

Question 8

Which of the following costs do not vary with the amount of output a firm produces?

Accepted Answer

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

Question 9

There is general agreement among economists that the long-run time period exceeds one year.

Accepted Answer

A) True 
 B)False

Question 10

Scenario 12-2
Chelsea wants to start her own Christmas ornament business.She can purchase a suitable factory that costs $100,000.Chelsea currently has $150,000 in the bank earning 3 percent interest per year.
-Refer to Scenario 12-2.Suppose Chelsea purchases the factory using her own money.What is Chelsea's annual implicit opportunity cost of purchasing the factory?

Accepted Answer

A)   $2,000
B)   $3,000
C)   $4,500
D)   $5,000E) A) and C)
F) A) and B)

Question 11

Table 12-15
Consider the following table of long-run total cost for four different firms:
 
-Refer to Table 12-13.Which firm's long-run marginal cost decreases as output increases?

Accepted Answer

A)   Firm 1
B)   Firm 2
C)   Firm 3
D)   Firm 4E) All of the above
F) None of the above

Question 12

A production function describes

Accepted Answer

A)   how a firm maximizes profits.
B)   how a firm turns inputs into output.
C)   the minimal cost of producing a given level of output.
D)   the relationship between cost and output.E) A) and D)
F) C) and D)

Question 13

Figure 12-5 
-Refer to Figure 12-5.Curve A represents which type of cost curve?

Accepted Answer

A)   marginal cost
B)   average total cost
C)   average variable cost
D)   average fixed costE) All of the above
F) C) and D)

Question 14

Scenario 12-1
Calvin wants to start his own business making candles.He can purchase a candle factory that costs $400,000.Calvin currently has $500,000 in the bank earning 3 percent interest per year.
-Refer to Scenario 12-1.If Calvin purchases the factory with his own money,what is the annual implicit opportunity cost of purchasing the factory?

Accepted Answer

A)   $0
B)   $3,000
C)   $12,000
D)   $15,000E) A) and C)
F) None of the above

Question 15

Economists in the field of industrial organization study how

Accepted Answer

A)   central banking policies affect financial markets.
B)   firms' demand for labor and individuals' supply of labor affect resource markets.
C)   firms' decisions about prices and quantities depend on market conditions.
D)   externalities and public goods affect the environment.E) None of the above
F) B) and D)

Question 16

Firms may experience diseconomies of scale when

Accepted Answer

A)   they are too small to take advantage of specialization.
B)   large management structures are bureaucratic and inefficient.
C)   there are too few employees,and managers do not have enough to do.
D)   average fixed costs begin to rise again.E) B) and C)
F) A) and D)

Question 17

When comparing short-run average total cost with long-run average total cost at a given level of output,

Accepted Answer

A)   short-run average total cost is typically above long-run average total cost.
B)   short-run average total cost is typically the same as long-run average total cost.
C)   short-run average total cost is typically below long-run average total cost.
D)   the relationship between short-run and long-run average total cost follows no clear pattern.E) A) and B)
F) A) and C)

Question 18

The production function depicts a relationship between which two variables? Also,draw a production function that exhibits diminishing marginal product.

Accepted Answer

The production function depict...

Question 19

At Bert's Bootery,the total cost of producing twenty pairs of boots is $400.The marginal cost of producing the twenty-first pair of boots is $83.We can conclude that the

Accepted Answer

A)   average variable cost of 21 pairs of boots is $23.
B)   average total cost of 21 pairs of boots is $23.
C)   average total cost of 21 pairs of boots is $15.09.
D)   marginal cost of the 20th pair of boots is $20.E) B) and C)
F) B) and D)

Question 20

Figure 12-5 
-Refer to Figure 12-5.Which of the curves is most likely to represent average fixed cost?

Accepted Answer

A)   A
B)   B
C)   C
D)   DE) A) and C)
F) B) and D)

Exam 12: The Costs of Production

Figure 12-5 -Refer to Figure 12-5.Curve A represents which type of cost curve?

Correct Answer
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Figure 12-5 -Refer to Figure 12-5.Which of the curves is most likely to represent average fixed cost?

Correct Answer
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The minimum points of the average variable cost and average total cost curves occur where the

Correct Answer
verified

Correct Answer
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Figure 12-8 -Refer to Figure 12-8.The efficient scale of production occurs at which quantity?

Correct Answer
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There is general agreement among economists that the long-run time period exceeds one year.

Correct Answer
verified

When comparing short-run average total cost with long-run average total cost at a given level of output,

Correct Answer
verified

In the long run Firm A incurs total costs of $1,050 when output is 30 units and $1,200 when output is 40 units.Firm A exhibits

Correct Answer
verified

Table 12-15 Consider the following table of long-run total cost for four different firms: -Refer to Table 12-13.Which firm's long-run marginal cost decreases as output increases?

Correct Answer
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Adam Smith describes a visit to a car factory when discussing economies of scale in his book An Inquiry into the Nature and Causes of the Wealth of Nations.

Correct Answer
verified

Which of the following costs do not vary with the amount of output a firm produces?

Correct Answer
verified

Table 12-3 -Refer to Table 12-3.The marginal product of the second worker is

Correct Answer
verified

At Bert's Bootery,the total cost of producing twenty pairs of boots is $400.The marginal cost of producing the twenty-first pair of boots is $83.We can conclude that the

Correct Answer
verified

A production function describes

Correct Answer
verified

Economists in the field of industrial organization study how

Correct Answer
verified

Correct Answer
verified

Cody builds mailboxes.If he charges $20 for each mailbox,his total revenue will be

Correct Answer
verified

Firms may experience diseconomies of scale when

Correct Answer
verified

Correct Answer
verified

The production function depicts a relationship between which two variables? Also,draw a production function that exhibits diminishing marginal product.

Correct Answer
verified
The production function depict...
View Answer

Exam 12: The Costs of Production

Figure 12-5 -Refer to Figure 12-5.Curve A represents which type of cost curve?

Correct AnswerverifiedShow Answer

Figure 12-5 -Refer to Figure 12-5.Which of the curves is most likely to represent average fixed cost?

Correct AnswerverifiedShow Answer

The minimum points of the average variable cost and average total cost curves occur where the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 12-8 -Refer to Figure 12-8.The efficient scale of production occurs at which quantity?

Correct AnswerverifiedShow Answer

There is general agreement among economists that the long-run time period exceeds one year.

Correct AnswerverifiedShow Answer

When comparing short-run average total cost with long-run average total cost at a given level of output,

Correct AnswerverifiedShow Answer

In the long run Firm A incurs total costs of $1,050 when output is 30 units and $1,200 when output is 40 units.Firm A exhibits

Correct AnswerverifiedShow Answer

Table 12-15 Consider the following table of long-run total cost for four different firms: -Refer to Table 12-13.Which firm's long-run marginal cost decreases as output increases?

Correct AnswerverifiedShow Answer

Adam Smith describes a visit to a car factory when discussing economies of scale in his book An Inquiry into the Nature and Causes of the Wealth of Nations.

Correct AnswerverifiedShow Answer

Which of the following costs do not vary with the amount of output a firm produces?

Correct AnswerverifiedShow Answer

Table 12-3 -Refer to Table 12-3.The marginal product of the second worker is

Correct AnswerverifiedShow Answer

At Bert's Bootery,the total cost of producing twenty pairs of boots is $400.The marginal cost of producing the twenty-first pair of boots is $83.We can conclude that the

Correct AnswerverifiedShow Answer

A production function describes

Correct AnswerverifiedShow Answer

Economists in the field of industrial organization study how

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Cody builds mailboxes.If he charges $20 for each mailbox,his total revenue will be

Correct AnswerverifiedShow Answer

Firms may experience diseconomies of scale when

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The production function depicts a relationship between which two variables? Also,draw a production function that exhibits diminishing marginal product.

Correct AnswerverifiedThe production function depict...View AnswerShow Answer

Correct Answer
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The production function depict...
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