Question 1

According to the mathematical laws that govern the relationship between average total cost and marginal cost, where must these two curves intersect?

Accepted Answer

The two curves will ...

Question 2

Scenario 13-5
Suppose that Emily opens a restaurant. She receives a loan from a bank for $200,000. She withdraws $100,000 from her personal savings account. The interest rate on the loan is 6%, and the interest rate on her savings account is 2%.
-Refer to Scenario 13-5. Emily's total opportunity cost of capital is

Accepted Answer

A)  $2,000.
B)  $4,000.
C)  $12,000.
D)  $14,000.E) A) and B)
F) A) and C)

Question 3

When the marginal product of an input declines as the quantity of that input increases, the production function exhibits

Accepted Answer

A)  increasing marginal product.
B)  diminishing marginal product.
C)  diminishing total product.
D)  Both b and c are correct.E) None of the above
F) B) and D)

Question 4

Economists assume that the typical person who starts her own business does so with the intention of

Accepted Answer

A)  donating the profits from her business to charity.
B)  capturing the highest number of sales in her industry.
C)  maximizing profits.
D)  minimizing costs.E) A) and B)
F) B) and D)

Question 5

Table 13-14 
-Refer to Table 13-14. What is the marginal cost of the 2nd unit of output?

Accepted Answer

A)  $10
B)  $15
C)  $24
D)  $38E) B) and D)
F) All of the above

Question 6

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

Accepted Answer

A)  $0
B)  $50
C)  $220
D)  $270E) A) and B)
F) A) and C)

Question 7

The marginal product of any input is the

Accepted Answer

A)  increase in total cost associated with a one-unit increase in production.
B)  change in total output associated with a $1.00 increase in total cost.
C)  increase in total cost resulting from the hiring of an additional worker.
D)  increase in total output obtained from one additional unit of that input.E) None of the above
F) C) and D)

Question 8

Suppose that a firm's long-run average total costs of producing televisions decreases as it produces between 10,000 and 20,000 televisions. For this range of output, the firm is experiencing

Accepted Answer

A)  economies of scale.
B)  constant returns to scale.
C)  diseconomies of scale.
D)  coordination problems.E) A) and B)
F) A) and C)

Question 9

Cindy's Car Wash has average variable costs of $2 and average total costs of $3 when it produces 100 units of output (car washes) . The firm's total variable cost is

Accepted Answer

A)  $100.
B)  $200.
C)  $300.
D)  $500.E) A) and C)
F) All of the above

Question 10

If marginal cost is below average total cost, then average total cost

Accepted Answer

A)  is constant.
B)  is falling.
C)  is rising.
D)  may rise or fall depending on the size of fixed costs.E) None of the above
F) C) and D)

Question 11

When a firm is experiencing diseconomies of scale, long-run

Accepted Answer

A)  average total cost is minimized.
B)  average total cost is greater than long-run marginal cost.
C)  average total cost is less than long-run marginal cost.
D)  marginal cost is minimized.E) All of the above
F) A) and B)

Question 12

Table 13-14 
-Refer to Table 13-14. What is the average total cost of producing 2 units of output?

Accepted Answer

A)  $15
B)  $19
C)  $24
D)  $48E) A) and B)
F) B) and C)

Question 13

Figure 13-5 
-Refer to Figure 13-5. Which curve is most likely to represent marginal cost?

Accepted Answer

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

Question 14

Which of the following must always be true as the quantity of output increases?

Accepted Answer

A)  Marginal cost must rise.
B)  Average total cost must rise.
C)  Average variable cost must rise.
D)  Average fixed cost must fall.E) A) and D)
F) A) and C)

Question 15

At what level of output will average variable cost equal average total cost?

Accepted Answer

A)  when marginal cost equals average total cost
B)  for all levels of output in which average variable cost is falling
C)  when marginal cost equals average variable cost
D)  There is no level of output where this occurs, as long as fixed costs are positive.E) A) and B)
F) A) and C)

Question 16

Figure 13-9
The figure below depicts average total cost functions for a firm that produces automobiles. 
-Refer to Figure 13-9. At output levels greater than N, the firm experiences

Accepted Answer

A)  economies of scale.
B)  constant returns to scale.
C)  diseconomies of scale.
D)  minimum efficient scale.E) A) and D)
F) B) and C)

Question 17

Variable costs usually change as the firm alters the quantity of output produced.

Accepted Answer

A) True 
 B)False

Question 18

Suppose that for a particular business there are no implicit costs. Then

Accepted Answer

A)  accounting profit will be greater than economic profit.
B)  accounting profit will be the same as economic profit.
C)  accounting profit will be less than economic profit.
D)  the relationship between accounting profit and economic profit cannot be determined without more information.E) B) and C)
F) All of the above

Question 19

Suppose that a worker can produce 100 units of output in 7 hours. In the 8th hour, he can produce 12 units of output. The worker can produce 112 units of output in 8 hours.

Accepted Answer

A) True 
 B)False

Question 20

DIFFICULTY:
Figure 13-8 
-Refer to Figure 13-8. 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)

Exam 13: The Costs of Production

Variable costs usually change as the firm alters the quantity of output produced.

Correct Answer
verified

When the marginal product of an input declines as the quantity of that input increases, the production function exhibits

Correct Answer
verified

If marginal cost is below average total cost, then average total cost

Correct Answer
verified

Cindy's Car Wash has average variable costs of $2 and average total costs of $3 when it produces 100 units of output (car washes) . The firm's total variable cost is

Correct Answer
verified

Suppose that a worker can produce 100 units of output in 7 hours. In the 8th hour, he can produce 12 units of output. The worker can produce 112 units of output in 8 hours.

Correct Answer
verified

According to the mathematical laws that govern the relationship between average total cost and marginal cost, where must these two curves intersect?

Correct Answer
verified
The two curves will ...
View Answer

Suppose that a firm's long-run average total costs of producing televisions decreases as it produces between 10,000 and 20,000 televisions. For this range of output, the firm is experiencing

Correct Answer
verified

DIFFICULTY: Figure 13-8 -Refer to Figure 13-8. The efficient scale of production occurs at which quantity?

Correct Answer
verified

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. At output levels greater than N, the firm experiences

Correct Answer
verified

Suppose that for a particular business there are no implicit costs. Then

Correct Answer
verified

Economists assume that the typical person who starts her own business does so with the intention of

Correct Answer
verified

Correct Answer
verified

Table 13-14 -Refer to Table 13-14. What is the marginal cost of the 2nd unit of output?

Correct Answer
verified

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

Correct Answer
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Figure 13-5 -Refer to Figure 13-5. Which curve is most likely to represent marginal cost?

Correct Answer
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Table 13-14 -Refer to Table 13-14. What is the average total cost of producing 2 units of output?

Correct Answer
verified

The marginal product of any input is the

Correct Answer
verified

At what level of output will average variable cost equal average total cost?

Correct Answer
verified

When a firm is experiencing diseconomies of scale, long-run

Correct Answer
verified

Which of the following must always be true as the quantity of output increases?

Correct Answer
verified

Exam 13: The Costs of Production

Variable costs usually change as the firm alters the quantity of output produced.

Correct AnswerverifiedShow Answer

When the marginal product of an input declines as the quantity of that input increases, the production function exhibits

Correct AnswerverifiedShow Answer

If marginal cost is below average total cost, then average total cost

Correct AnswerverifiedShow Answer

Cindy's Car Wash has average variable costs of $2 and average total costs of $3 when it produces 100 units of output (car washes) . The firm's total variable cost is

Correct AnswerverifiedShow Answer

Suppose that a worker can produce 100 units of output in 7 hours. In the 8th hour, he can produce 12 units of output. The worker can produce 112 units of output in 8 hours.

Correct AnswerverifiedShow Answer

According to the mathematical laws that govern the relationship between average total cost and marginal cost, where must these two curves intersect?

Correct AnswerverifiedThe two curves will ...View AnswerShow Answer

Suppose that a firm's long-run average total costs of producing televisions decreases as it produces between 10,000 and 20,000 televisions. For this range of output, the firm is experiencing

Correct AnswerverifiedShow Answer

DIFFICULTY: Figure 13-8 -Refer to Figure 13-8. The efficient scale of production occurs at which quantity?

Correct AnswerverifiedShow Answer

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. At output levels greater than N, the firm experiences

Correct AnswerverifiedShow Answer

Suppose that for a particular business there are no implicit costs. Then

Correct AnswerverifiedShow Answer

Economists assume that the typical person who starts her own business does so with the intention of

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 13-14 -Refer to Table 13-14. What is the marginal cost of the 2nd unit of output?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 13-5 -Refer to Figure 13-5. Which curve is most likely to represent marginal cost?

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Table 13-14 -Refer to Table 13-14. What is the average total cost of producing 2 units of output?

Correct AnswerverifiedShow Answer

The marginal product of any input is the

Correct AnswerverifiedShow Answer

At what level of output will average variable cost equal average total cost?

Correct AnswerverifiedShow Answer

When a firm is experiencing diseconomies of scale, long-run

Correct AnswerverifiedShow Answer

Which of the following must always be true as the quantity of output increases?

Correct AnswerverifiedShow Answer

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The two curves will ...
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