Question 1

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

Accepted Answer

A)   $50
B)   $100
C)   $150
D)   $200E) All of the above
F) None of the above

Question 2

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 3

A firm has a fixed cost of $500 in its first year of operation.When the firm produces 100 units of output,its total costs are $3,500.When it produces 101 units of output,its total costs are $3,750.What is the marginal cost of producing the 101st unit of output?

Accepted Answer

A)   $250
B)   $275
C)   $340.91
D)   $350E) A) and B)
F) A) and C)

Question 4

Grace is a self-employed artist.She can make 20 pieces of pottery per week.She is considering hiring her sister Kate to work for her.Kate can make 18 pieces of pottery per week.What would be the total output of Grace's firm if she hired her sister?

Accepted Answer

A)   18 pieces of pottery
B)   19 pieces of pottery
C)   20 pieces of pottery
D)   38 pieces of potteryE) All of the above
F) A) and D)

Question 5

Constant returns to scale occur when the firm's long-run

Accepted Answer

A)   total costs are constant as output increases.
B)   average total costs are constant as output increases.
C)   average cost curve is falling as output increases.
D)   average cost curve is rising as output increases.E) All of the above
F) A) and C)

Question 6

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) B) and C)

Question 7

Figure 13-3 
-Refer to Figure 13-3.Which of the following statements best captures the nature of the underlying production function (not pictured) ?

Accepted Answer

A)   Output increases at a decreasing rate with additional units of input.
B)   Output increases at an increasing rate with additional units of input.
C)   Output decreases at a decreasing rate with additional units of input.
D)   Output decreases at an increasing rate with additional units of input.E) A) and C)
F) A) and D)

Question 8

Table 13-2
 
-Refer to Table 13-2.What is the average fixed cost of producing 450 units of output?

Accepted Answer

AFC = FC/Q...

Question 9

In the long run Al's Sandwich Shop incurs total costs of $2,500 when output is 1,250 units and $3,000 when output is 1,500 units.For this range of output,Al's exhibits

Accepted Answer

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

Question 10

What effect,if any,does diminishing marginal product have on the shape of the marginal cost curve?

Accepted Answer

Diminishing marginal...

Question 11

Economies of scale occur when a firm's

Accepted Answer

A)   marginal costs are constant as output increases.
B)   long-run average total costs are decreasing as output increases.
C)   long-run average total costs are increasing as output increases.
D)   marginal costs are equal to average total costs for all levels of output.E) A) and B)
F) A) and C)

Question 12

Table 13-2
 
-Refer to Table 13-2.What is the marginal product of the first worker?

Accepted Answer

A)   250 units
B)   200 units
C)   150 units
D)   50 unitsE) All of the above
F) B) and C)

Question 13

The average fixed cost curve

Accepted Answer

A)   always declines with increased levels of output.
B)   always rises with increased levels of output.
C)   declines as long as it is above marginal cost.
D)   declines as long as it is below marginal cost.E) B) and C)
F) A) and D)

Question 14

Table 13-1
 
-Refer to Table 13-1.What is total output when 2 workers are hired?

Accepted Answer

A)   10
B)   40
C)   70
D)   120E) None of the above
F) A) and D)

Question 15

When a firm is experiencing economies 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) B) and C)
F) None of the above

Question 16

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

Accepted Answer

A)   $25
B)   $50
C)   $110
D)   $220E) B) and D)
F) B) and C)

Question 17

Diminishing marginal productivity implies decreasing total product.

Accepted Answer

A) True 
 B)False

Question 18

In the long run Firm A incurs total costs of $900 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)   constant returns to scale because average total cost is constant as output rises.
C)   diseconomies of scale because average total cost is rising as output rises.
D)   economies of scale because average total cost is falling as output rises.E) None of the above
F) B) and D)

Question 19

Accounting profit is equal to

Accepted Answer

A)   marginal revenue minus marginal cost.
B)   total revenue minus the explicit cost of producing goods and services.
C)   total revenue minus the opportunity cost of producing goods and services.
D)   average revenue minus the average cost of producing the last unit of a good or service.E) A) and B)
F) B) and C)

Question 20

The shape of the marginal cost curve tells a producer something about the marginal product of her workers.

Accepted Answer

A) True 
 B)False

Exam 13: The Costs of Production

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.

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Figure 13-3 -Refer to Figure 13-3.Which of the following statements best captures the nature of the underlying production function (not pictured) ?

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The shape of the marginal cost curve tells a producer something about the marginal product of her workers.

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Table 13-1 -Refer to Table 13-1.What is total output when 2 workers are hired?

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

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What effect,if any,does diminishing marginal product have on the shape of the marginal cost curve?

Correct AnswerverifiedDiminishing marginal...View AnswerShow Answer

Table 13-2 -Refer to Table 13-2.What is the marginal product of the first worker?

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Constant returns to scale occur when the firm's long-run

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Economies of scale occur when a firm's

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Table 13-2 -Refer to Table 13-2.What is the average fixed cost of producing 450 units of output?

Correct AnswerverifiedAFC = FC/Q...View AnswerShow Answer

Grace is a self-employed artist.She can make 20 pieces of pottery per week.She is considering hiring her sister Kate to work for her.Kate can make 18 pieces of pottery per week.What would be the total output of Grace's firm if she hired her sister?

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A firm has a fixed cost of $500 in its first year of operation.When the firm produces 100 units of output,its total costs are $3,500.When it produces 101 units of output,its total costs are $3,750.What is the marginal cost of producing the 101st unit of output?

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In the long run Al's Sandwich Shop incurs total costs of $2,500 when output is 1,250 units and $3,000 when output is 1,500 units.For this range of output,Al's exhibits

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

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

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The average fixed cost curve

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Diminishing marginal productivity implies decreasing total product.

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Accounting profit is equal to

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

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In the long run Firm A incurs total costs of $900 when output is 30 units and $1,200 when output is 40 units.Firm A exhibits

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Diminishing marginal...
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AFC = FC/Q...
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