Question 1

Average fixed costs:

Accepted Answer

A)  always trend downward as output increases.
B)  always trend upward as output increases.
C)  are a constant, regardless of quantity of output.
D)  are a vertical line.E) B) and C)
F) B) and D)

Question 2

_____ would be considered a one-time expense for a shoe factory and would be _____ total cost.

Accepted Answer

A)  A sewing machine; included in
B)  A sewing machine; excluded from
C)  Leather to make shoes; included in
D)  Leather to make shoes; excluded fromE) A) and B)
F) B) and C)

Question 3

Mariana needs $20,000 to start up her own business and get it off the ground. She can either withdraw the money from her savings account, where she currently earns 1.5 percent interest, or she can take out a loan for $20,000 and pay 4 percent interest. Which of the following statements is true?The implicit cost of taking out a loan is $300.The explicit cost of taking out a loan is $800.The implicit cost of withdrawing money from her savings account is $300.

Accepted Answer

A)  I only
B)  II only
C)  II and III only
D)  I, II and IIIE) None of the above
F) A) and D)

Question 4

Suppose Winston's annual salary as an accountant is $60,000 and his financial assets generate $4,000 per year in interest. One day, after deciding to be his own boss, he quits his job and uses his financial assets to establish a consulting business, which he runs out of his home. He outlays $8,000 in cash to cover all the costs involved with running the business and earns revenues of $150,000. What costs would be considered when calculating accounting profit?

Accepted Answer

A)  The opportunity cost of his job and interest forgone of $64,000 and the explicit cost of $8,000
B)  The implicit cost of the interest forgone of $4,000 and the explicit cost of $8,000
C)  The explicit cost of $8,000
D)  The implicit cost of his job of $60,000 and the opportunity cost of forgone interest of $4,000E) None of the above
F) A) and D)

Question 5

Suppose Bev's Bags makes large and small handbags. Bev rents an industrial space where she keeps the company's fabric, industrial sewing machine, measuring board, cutting shears, extra needles, thread, buttons, and labels. Bev can produce three bags an hour, regardless of the size of the bag. Which of the following would be considered a fixed cost?

Accepted Answer

A)  The rent Bev pays
B)  The fabric
C)  The sewing thread
D)  None of these are fixed costs.E) B) and D)
F) C) and D)

Question 6

The table shows the total production of hats in a factory given various numbers of employees. Adding a seventh employee adds _____ hats to total production.

Accepted Answer

A)  255
B)  25
C)  20
D)  275E) All of the above
F) B) and C)

Question 7

The average product curve tells us:

Accepted Answer

A)  the level of inputs that are the most productive.
B)  the cost-minimizing level of inputs to hire.
C)  the profit-maximizing level of inputs to hire.
D)  The average product curve tells us all of these.E) B) and C)
F) A) and D)

Question 8

Suppose Larry's Lariats produces lassos in a factory, using nine feet of rope to make each lasso. The rope is put into a machine that automatically cuts it to the right length and seals the ends to prevent fraying. The rope is then hand tied, dipped, and wound before being placed in a packaging machine to prepare it for retail sale. If the company decreases its production of lassos, what is true regarding the company's costs?

Accepted Answer

A)  The variable cost of the rope would drop to zero.
B)  The fixed cost of the rope cutting machine would stay the same.
C)  The fixed cost of employee wages would stay the same.
D)  None of these are correct.E) B) and C)
F) All of the above

Question 9

Tina withdraws $20,000 from her money market account to start up her own house cleaning business. Over that time, the account would have earned 3 percent interest. In order to properly account for all costs of her business, Tina must not forget:

Accepted Answer

A)  the opportunity cost of $2,600.
B)  the opportunity cost of $600.
C)  the fixed cost of $20,600.
D)  the fixed cost of $20,600 and the opportunity cost of $600.E) A) and C)
F) B) and D)

Question 10

How is profit calculated?

Accepted Answer

A)  Total revenue minus total cost
B)  Total revenue plus total cost
C)  Total cost minus total revenue
D)  None of these calculations are correct.E) A) and D)
F) A) and C)

Question 11

The table shows the total production of hats in a factory given various numbers of employees. Adding a third worker increases production:

Accepted Answer

A)  by 60 hats.
B)  by more than the second worker.
C)  to 110 hats.
D)  All of these are correct.E) A) and D)
F) B) and C)

Question 12

A cigar factory employs 20 workers and produces 1,000 cigars a day. The company reduces the workforce to 19 workers and produces 912 cigars a day. The 20th worker:

Accepted Answer

A)  had a marginal product of 88 cigars.
B)  caused average product to fall.
C)  must have had a lower marginal product than the 19th worker.
D)  All of these are correct.E) A) and B)
F) A) and D)

Question 13

Total revenue can be defined as:

Accepted Answer

A)  the amount that a firm receives from the sale of goods and services.
B)  the amount that a firm spends on all inputs that go into making a good or service.
C)  the total amount a firm spends on all inputs used in production.
D)  the total number of sales of a good or service by a firm.E) A) and D)
F) B) and D)

Question 14

The table shows the total production of hats in a factory given various numbers of employees. What is the marginal product of the ninth worker?

Accepted Answer

A)  10
B)  5
C)  15
D)  290E) A) and C)
F) None of the above

Question 15

Which of the following would be considered a one-time expense?

Accepted Answer

A)  Raw materials
B)  An oven
C)  Radio ads
D)  A manager's salaryE) A) and D)
F) A) and C)

Question 16

When marginal product _____ average product, average product must be _____.

Accepted Answer

A)  is greater than; increasing
B)  is greater than; decreasing
C)  is less than; increasing
D)  All of these are possible.E) All of the above
F) C) and D)

Question 17

If a firm decreases production, its:

Accepted Answer

A)  variable costs decrease.
B)  fixed costs decrease.
C)  total costs stay the same.
D)  None of these are correct.E) A) and B)
F) B) and C)

Question 18

The table shows costs for an individual firm. Which of the following statements is true?Marginal cost is greater than average total cost for quantities greater than 4.Average total cost is increasing for quantities greater than 4.The minimum of average total cost is at a quantity of 6.

Accepted Answer

A)  I and II only
B)  II only
C)  III only
D)  I, II, and IIIE) A) and D)
F) A) and C)

Question 19

In general, economic profit is typically:

Accepted Answer

A)  greater than accounting profit.
B)  less than accounting profit.
C)  the same as accounting profit.
D)  not comparable to accounting profit.E) C) and D)
F) A) and C)

Question 20

Mika borrows $100,000 to open up her own beauty shop. She pays 5 percent interest on her loan. In order to account for all costs of her business, Mika must not forget:

Accepted Answer

A)  the implicit cost of $100,000.
B)  the implicit cost of $5,000.
C)  the explicit cost of $105,000.
D)  the explicit cost of $5,000.E) All of the above
F) A) and B)

Exam 12: The Costs of Production

Which of the following would be considered a one-time expense?

Correct Answer
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_ would be considered a one-time expense for a shoe factory and would be _ total cost.

Correct Answer
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The table shows the total production of hats in a factory given various numbers of employees. Adding a seventh employee adds _____ hats to total production.

Correct Answer
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The table shows the total production of hats in a factory given various numbers of employees. Adding a third worker increases production:

Correct Answer
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If a firm decreases production, its:

Correct Answer
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The average product curve tells us:

Correct Answer
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Average fixed costs:

Correct Answer
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Mika borrows $100,000 to open up her own beauty shop. She pays 5 percent interest on her loan. In order to account for all costs of her business, Mika must not forget:

Correct Answer
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Tina withdraws $20,000 from her money market account to start up her own house cleaning business. Over that time, the account would have earned 3 percent interest. In order to properly account for all costs of her business, Tina must not forget:

Correct Answer
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The table shows the total production of hats in a factory given various numbers of employees. What is the marginal product of the ninth worker?

Correct Answer
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Correct Answer
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Total revenue can be defined as:

Correct Answer
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In general, economic profit is typically:

Correct Answer
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Correct Answer
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Correct Answer
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When marginal product _ average product, average product must be _.

Correct Answer
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A cigar factory employs 20 workers and produces 1,000 cigars a day. The company reduces the workforce to 19 workers and produces 912 cigars a day. The 20^th worker:

Correct Answer
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How is profit calculated?

Correct Answer
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The table shows costs for an individual firm. Which of the following statements is true?Marginal cost is greater than average total cost for quantities greater than 4.Average total cost is increasing for quantities greater than 4.The minimum of average total cost is at a quantity of 6.

Correct Answer
verified

Correct Answer
verified

Exam 12: The Costs of Production

Which of the following would be considered a one-time expense?

Correct AnswerverifiedShow Answer

_____ would be considered a one-time expense for a shoe factory and would be _____ total cost.

Correct AnswerverifiedShow Answer

The table shows the total production of hats in a factory given various numbers of employees. Adding a seventh employee adds _____ hats to total production.

Correct AnswerverifiedShow Answer

The table shows the total production of hats in a factory given various numbers of employees. Adding a third worker increases production:

Correct AnswerverifiedShow Answer

If a firm decreases production, its:

Correct AnswerverifiedShow Answer

The average product curve tells us:

Correct AnswerverifiedShow Answer

Average fixed costs:

Correct AnswerverifiedShow Answer

Mika borrows $100,000 to open up her own beauty shop. She pays 5 percent interest on her loan. In order to account for all costs of her business, Mika must not forget:

Correct AnswerverifiedShow Answer

Tina withdraws $20,000 from her money market account to start up her own house cleaning business. Over that time, the account would have earned 3 percent interest. In order to properly account for all costs of her business, Tina must not forget:

Correct AnswerverifiedShow Answer

The table shows the total production of hats in a factory given various numbers of employees. What is the marginal product of the ninth worker?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Total revenue can be defined as:

Correct AnswerverifiedShow Answer

In general, economic profit is typically:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When marginal product _____ average product, average product must be _____.

Correct AnswerverifiedShow Answer

A cigar factory employs 20 workers and produces 1,000 cigars a day. The company reduces the workforce to 19 workers and produces 912 cigars a day. The 20th worker:

Correct AnswerverifiedShow Answer

How is profit calculated?

Correct AnswerverifiedShow Answer

The table shows costs for an individual firm. Which of the following statements is true?Marginal cost is greater than average total cost for quantities greater than 4.Average total cost is increasing for quantities greater than 4.The minimum of average total cost is at a quantity of 6.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
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_ would be considered a one-time expense for a shoe factory and would be _ total cost.

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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When marginal product _ average product, average product must be _.

Correct Answer
verified

A cigar factory employs 20 workers and produces 1,000 cigars a day. The company reduces the workforce to 19 workers and produces 912 cigars a day. The 20^th worker:

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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