Question 1

Suppose that a "doggie day care" firm uses only two inputs: hourly workers (labor)  and a building (capital) . In the short run, the firm most likely considers

Accepted Answer

A)   both labor and capital to be fixed.
B)   both labor and capital to be variable.
C)   labor to be variable and capital to be fixed.
D)   capital to be variable and labor to be fixed.E) A) and C)
F) B) and C)

Question 2

Table 13-19 
-Refer to Table 13-19. What is the marginal product of the second worker?

Accepted Answer

250 - 100 ...

Question 3

Scenario 13-22
Suppose that a small hair styling salon had revenues of $150,000 in a given year. The owner spent $10,000 on utilities, $60,000 on supplies (shampoo, conditioner, hair coloring and other chemicals, etc.), and $50,000 on equipment (mirrors, chairs, scissors, curling irons, etc.), including maintenance. The owner could have earned $50,000 working at another salon.
-Refer to Scenario 13-22. What is the economic profit for the hair styling salon?

Accepted Answer

Economic profit = Total revenu...

Question 4

Profit is defined as

Accepted Answer

A)   net revenue minus depreciation.
B)   total revenue minus total cost.
C)   average revenue minus average total cost.
D)   marginal revenue minus marginal cost.E) All of the above
F) A) and C)

Question 5

In the long run a company that produces and sells candy bars incurs total costs of $1,200 when output is 2,400 candy bars and $1,400 when output is 2,900 candy bars. The candy bar company 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) A) and B) D

Question 6

Table 13-6
Wooden Chair Factory 
-Refer to Table 13-6. Each worker at the Wooden Chair Factory costs $12 per hour. The cost of each machine is$20 per day regardless of the number of chairs produced. What is the total daily cost of producing at a rate of 55 chairs per hour if the factory operates 8 hours per day?

Accepted Answer

A)   $480
B)   $576
C)   $520
D)   $616E) A) and B)
F) B) and C)

Question 7

Which of the following can be added to profit to obtain total revenue?

Accepted Answer

A)   net profit
B)   capital profit
C)   operational profit
D)   total costE) All of the above
F) C) and D)

Question 8

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 C)

Question 9

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

Accepted Answer

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

Question 10

Total cost is the

Accepted Answer

A)   amount a firm receives for the sale of its output.
B)   fixed cost less variable cost.
C)   market value of the inputs a firm uses in production.
D)   quantity of output minus the quantity of inputs used to make a good.E) B) and C)
F) All of the above

Question 11

Table 13-20
Listed in the table are the long-run total costs for three different firms. 
-Refer to Table 13-20. Firm A is experiencing constant returns to scale.

Accepted Answer

A) True 
 B)False

Question 12

The difference between accounting profit and economic profit is

Accepted Answer

A)   explicit costs.
B)   implicit costs.
C)   total revenue.
D)   marginal product.E) All of the above
F) A) and B)

Question 13

Bubba is a shrimp fisherman who could earn $5,000 as a fishing tour guide. Instead, he is a full-time shrimp fisherman. In calculating the economic profit of his shrimp business, the $5,000 that Bubba gave up is counted as part of the shrimp business's

Accepted Answer

A)   total revenue.
B)   explicit costs.
C)   implicit costs.
D)   marginal costs.E) A) and B)
F) A) and C)

Question 14

Total revenue equals

Accepted Answer

A)   marginal revenue - marginal cost.
B)   price/quantity.
C)   price x quantity.
D)   output - input.E) A) and B)
F) A) and C)

Question 15

Figure 13-1 
-Refer to Figure 13-1. Suppose the production function shifts from TP1 to TP2. Such a shift in the total product curve is most likely due to an increase in the firm's

Accepted Answer

A)   costs of production.
B)   productivity.
C)   product price.
D)   market share.E) A) and B)
F) A) and C)

Question 16

Scenario 13-9
Ellie has been working for an engineering firm and earning an annual salary of $80,000. She decides to open her own engineering business. Her annual expenses will include $15,000 for office rent, $3,000 for equipment rental, $1,000 for supplies, $1,200 for utilities, and a $35,000 salary for a secretary/bookkeeper. Ellie will cover her start-up expenses by cashing in a $20,000 certificate of deposit on which she was earning annual interest of $500.
-Refer to Scenario 13-9. According to an economist, which of the following revenue totals will yield Ellie's business $50,000 in economic profits?

Accepted Answer

A)   $55,200
B)   $100,200
C)   $132,500
D)   $185,700E) None of the above
F) B) and C)

Question 17

Gwen has decided to start her own photography studio. To purchase the necessary equipment, Gwen withdrew $2,000 from her savings account, which was earning 3% interest, and borrowed an additional $4,000 from the bank at an interest rate of 7%. What is Gwen's annual opportunity cost of the financial capital that has been invested in the business?

Accepted Answer

A)   $60
B)   $280
C)   $340
D)   $660E) A) and B)
F) None of the above

Question 18

If the total cost curve gets steeper as output increases, the firm is experiencing

Accepted Answer

A)   diseconomies of scale.
B)   economies of scale.
C)   diminishing marginal product.
D)   increasing marginal product.E) B) and D)
F) A) and D)

Question 19

Economists normally assume that the goal of a firm is to

Accepted Answer

A)   (i)  and (ii)  only
B)   (ii)  and (iii)  only
C)   (iii)  only
D)   (i) , (ii) , and (iii) E) A) and B)
F) None of the above 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

Suppose that a "doggie day care" firm uses only two inputs: hourly workers (labor) and a building (capital) . In the short run, the firm most likely considers

Correct Answer
verified

Table 13-19 -Refer to Table 13-19. What is the marginal product of the second worker?

Correct Answer
verified
250 - 100 ...
View Answer

Correct Answer
verified
Economic profit = Total revenu...
View Answer

Profit is defined as

Correct Answer
verified

In the long run a company that produces and sells candy bars incurs total costs of $1,200 when output is 2,400 candy bars and $1,400 when output is 2,900 candy bars. The candy bar company exhibits

Correct Answer
verified
D

Correct Answer
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Which of the following can be added to profit to obtain total revenue?

Correct Answer
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Firms may experience diseconomies of scale when

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 levels of output less than M, the firm experiences

Correct Answer
verified
A

Total cost is the

Correct Answer
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Table 13-20 Listed in the table are the long-run total costs for three different firms. -Refer to Table 13-20. Firm A is experiencing constant returns to scale.

Correct Answer
verified

The difference between accounting profit and economic profit is

Correct Answer
verified

Bubba is a shrimp fisherman who could earn $5,000 as a fishing tour guide. Instead, he is a full-time shrimp fisherman. In calculating the economic profit of his shrimp business, the $5,000 that Bubba gave up is counted as part of the shrimp business's

Correct Answer
verified

Total revenue equals

Correct Answer
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Figure 13-1 -Refer to Figure 13-1. Suppose the production function shifts from TP1 to TP2. Such a shift in the total product curve is most likely due to an increase in the firm's

Correct Answer
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Correct Answer
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If the total cost curve gets steeper as output increases, the firm is experiencing

Correct Answer
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Economists normally assume that the goal of a firm is to

Correct Answer
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C

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

Correct Answer
verified

Exam 13: The Costs of Production

Suppose that a "doggie day care" firm uses only two inputs: hourly workers (labor) and a building (capital) . In the short run, the firm most likely considers

Correct AnswerverifiedShow Answer

Table 13-19 -Refer to Table 13-19. What is the marginal product of the second worker?

Correct Answerverified250 - 100 ...View AnswerShow Answer

Correct AnswerverifiedEconomic profit = Total revenu...View AnswerShow Answer

Profit is defined as

Correct AnswerverifiedShow Answer

In the long run a company that produces and sells candy bars incurs total costs of $1,200 when output is 2,400 candy bars and $1,400 when output is 2,900 candy bars. The candy bar company exhibits

Correct AnswerverifiedD

Correct AnswerverifiedShow Answer

Which of the following can be added to profit to obtain total revenue?

Correct AnswerverifiedShow Answer

Firms may experience diseconomies of scale when

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 levels of output less than M, the firm experiences

Correct AnswerverifiedA

Total cost is the

Correct AnswerverifiedShow Answer

Table 13-20 Listed in the table are the long-run total costs for three different firms. -Refer to Table 13-20. Firm A is experiencing constant returns to scale.

Correct AnswerverifiedShow Answer

The difference between accounting profit and economic profit is

Correct AnswerverifiedShow Answer

Bubba is a shrimp fisherman who could earn $5,000 as a fishing tour guide. Instead, he is a full-time shrimp fisherman. In calculating the economic profit of his shrimp business, the $5,000 that Bubba gave up is counted as part of the shrimp business's

Correct AnswerverifiedShow Answer

Total revenue equals

Correct AnswerverifiedShow Answer

Figure 13-1 -Refer to Figure 13-1. Suppose the production function shifts from TP1 to TP2. Such a shift in the total product curve is most likely due to an increase in the firm's

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If the total cost curve gets steeper as output increases, the firm is experiencing

Correct AnswerverifiedShow Answer

Economists normally assume that the goal of a firm is to

Correct AnswerverifiedC

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

Correct AnswerverifiedShow Answer

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Correct Answer
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250 - 100 ...
View Answer

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Economic profit = Total revenu...
View Answer

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D

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A

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C

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