Question 1

____ are defined as costs which are incurred regardless of the alternative action chosen in a decision-making problem.

Accepted Answer

A)  Opportunity costs
B)  Marginal costs
C)  Relevant costs
D)  Sunk costs
E)  None of the above

Question 2

The cost function is:

Accepted Answer

A)  a means for expressing output as a function of cost
B)  a schedule or mathematical relationship showing the total cost of producing various quantities of output
C)  similar to a profit and loss statement
D)  incapable in being developed from statistical regression analysis
E)  none of the above B

Question 3

The Jones Company has the following cost schedule:
  Prepare (a)average total cost and (b)marginal cost schedules for the firm.

Accepted Answer

The answer of The Jones Company has the following cost...

Question 4

If TC = 321 + 55Q - 5Q2,then average total cost at Q = 10 is:

Accepted Answer

A)  10.2
B)  102
C)  37.1
D)  371
E)  321

Question 5

A firm has determined that its variable costs are given by the following relationship:
VC = .05Q3 - 5Q2 + 500Q
where Q is the quantity of output produced.

Accepted Answer

The answer of A firm has determined that its variable...

Question 6

Which of the following is true with regards to a long-run cost function?

Accepted Answer

A)  The shape of the firm's long-run cost function is important in decisions to expand the scale of operations
B)  The long-run average cost curve is U-shaped
C)  The long-run average cost curve is flatter than the short-run average cost curve.
D)  The curve consists of the lower boundary of all the short-run cost curves
E)  All of the above

Question 7

Suppose that total cost is given by TC = 200 + 5Q - 0.4Q2 + 0.001Q3

Accepted Answer

A)  Fixed cost (F
C)  is $200
B)  Variable cost (V
C)  is 5Q - 0.4Q2 + 0.001Q3
C)  Average variable cost (AV
C)  is 5 - 0.4Q + 0.001Q2
D)  Marginal cost (M
C)  is 5 - 0.8Q +.003Q2
E)  All of the above are correct E

Question 8

A cottage industry exists in the home-manufacture of 'country crafts'.Especially treasured are handmade quilts.If the fourth completed quilt took 30 hours to make,and the eighth quilt took 28 hours.What is the percentage learning? Hint: Percentage learning = 100% - (c2/c1) •100%.

Accepted Answer

A)  5%
B)  6.7%
C)  10%
D)  100%
E)  122%

Question 9

According to the theory of cost,specialization in the use of variable resources in the short-run results initially in:

Accepted Answer

A)  decreasing returns and declining average and marginal costs
B)  increasing returns and declining average and marginal costs
C)  increasing returns and increasing average and marginal costs
D)  decreasing returns and increasing average and marginal costs
E)  none of the above

Question 10

The existence of diseconomies of scale (size) for the firm is hypothesized to result from:

Accepted Answer

A)  transportation costs
B)  imperfections in the labor market
C)  imperfections in the capital markets
D)  problems of coordination and control encountered by management
E)  All of the above

Question 11

What method of inventory valuation should be used for economic decision-making problems?

Accepted Answer

A)  book value
B)  original cost
C)  current replacement cost
D)  cost or market,whichever is lower
E)  historical cost

Question 12

Which of the following statements concerning the short-run average cost curve of economic theory is true?

Accepted Answer

A)  It is L-shaped
B)  It is  ⌢\smallfrown⌢ -shaped
C)  It is  ⌣\smallsmile⌣ -shaped
D)  It is  ∧\land∧ -shaped
E)  It is M-shaped

Question 13

During the last few days the Superior Company has been running into problems with its computer system.The last run of the production cost schedule resulted in the incomplete listing shown below.From your knowledge of cost theory,fill in the blanks.

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> * Determination of these cost...

Question 14

The relevant cost in economic decision-making is the opportunity cost of the resources rather than the outlay of funds required to obtain the resources.

Accepted Answer

A) True 
 B)False

Question 15

Possible sources of economies of scale (size) within a production plant include:

Accepted Answer

A)  specialization in the use of capital and labor
B)  imperfections in the labor market
C)  transportation costs
D)  a and b
E)  a and c A

Question 16

Economies of scale exist whenever long-run average costs:

Accepted Answer

A)  Increase as output is increased
B)  Remain constant as output is increased
C)  Decrease as output is increased
D)  Decline and then rise as output is increased
E)  None of the above

Question 17

Which of the following statements about cost functions is true?

Accepted Answer

A)  Variable costs will always increase in direct proportion to the quantity of output produced.
B)  The less capital equipment employed in the production process relative to labor and other inputs,the longer will be the period of time required to increase significantly the scale of operation.
C)  The shape of the firm's long-run cost function is important in decisions to expand the scale of operations.
D)  none of the above

Question 18

For a short-run cost function which of the following statements is (are) not true?

Accepted Answer

A)  The average fixed cost function is monotonically decreasing.
B)  The marginal cost function intersects the average fixed cost function where the average variable cost function is a minimum.
C)  The marginal cost function intersects the average variable cost function where the average variable cost function is a minimum.
D)  The marginal cost function intersects the average total cost function where the average total cost function is a minimum.
E)  b and c

Question 19

Economies of Scope refers to situations where per unit costs are:

Accepted Answer

A)  Unaffected when two or more products are produced
B)  Reduced when two or more products are produced
C)  Increased when two or more products are produced
D)  Demonstrating constant returns to scale
E)  Demonstrating decreasing returns to scale

Exam 8: Cost Analysis

____ are defined as costs which are incurred regardless of the alternative action chosen in a decision-making problem.

Correct Answer
verified

The cost function is:

Correct Answer
verified
B

The Jones Company has the following cost schedule: Prepare (a)average total cost and (b)marginal cost schedules for the firm.

Correct Answer
verified

If TC = 321 + 55Q - 5Q²,then average total cost at Q = 10 is:

Correct Answer
verified

A firm has determined that its variable costs are given by the following relationship: VC = .05Q³ - 5Q² + 500Q where Q is the quantity of output produced.

Correct Answer
verified

Which of the following is true with regards to a long-run cost function?

Correct Answer
verified

Suppose that total cost is given by TC = 200 + 5Q - 0.4Q² + 0.001Q³

Correct Answer
verified
E

A cottage industry exists in the home-manufacture of 'country crafts'.Especially treasured are handmade quilts.If the fourth completed quilt took 30 hours to make,and the eighth quilt took 28 hours.What is the percentage learning? Hint: Percentage learning = 100% - (c₂/c₁) •100%.

Correct Answer
verified

According to the theory of cost,specialization in the use of variable resources in the short-run results initially in:

Correct Answer
verified

The existence of diseconomies of scale (size) for the firm is hypothesized to result from:

Correct Answer
verified

What method of inventory valuation should be used for economic decision-making problems?

Correct Answer
verified

Which of the following statements concerning the short-run average cost curve of economic theory is true?

Correct Answer
verified

During the last few days the Superior Company has been running into problems with its computer system.The last run of the production cost schedule resulted in the incomplete listing shown below.From your knowledge of cost theory,fill in the blanks.

Correct Answer
verified
* Determination of these cost...
View Answer

The relevant cost in economic decision-making is the opportunity cost of the resources rather than the outlay of funds required to obtain the resources.

Correct Answer
verified

Possible sources of economies of scale (size) within a production plant include:

Correct Answer
verified
A

Economies of scale exist whenever long-run average costs:

Correct Answer
verified

Which of the following statements about cost functions is true?

Correct Answer
verified

For a short-run cost function which of the following statements is (are) not true?

Correct Answer
verified

Economies of Scope refers to situations where per unit costs are:

Correct Answer
verified

Exam 8: Cost Analysis

____ are defined as costs which are incurred regardless of the alternative action chosen in a decision-making problem.

Correct AnswerverifiedShow Answer

The cost function is:

Correct AnswerverifiedB

The Jones Company has the following cost schedule: Prepare (a)average total cost and (b)marginal cost schedules for the firm.

Correct AnswerverifiedShow Answer

If TC = 321 + 55Q - 5Q2,then average total cost at Q = 10 is:

Correct AnswerverifiedShow Answer

A firm has determined that its variable costs are given by the following relationship: VC = .05Q3 - 5Q2 + 500Q where Q is the quantity of output produced.

Correct AnswerverifiedShow Answer

Which of the following is true with regards to a long-run cost function?

Correct AnswerverifiedShow Answer

Suppose that total cost is given by TC = 200 + 5Q - 0.4Q2 + 0.001Q3

Correct AnswerverifiedE

A cottage industry exists in the home-manufacture of 'country crafts'.Especially treasured are handmade quilts.If the fourth completed quilt took 30 hours to make,and the eighth quilt took 28 hours.What is the percentage learning? Hint: Percentage learning = 100% - (c2/c1) •100%.

Correct AnswerverifiedShow Answer

According to the theory of cost,specialization in the use of variable resources in the short-run results initially in:

Correct AnswerverifiedShow Answer

The existence of diseconomies of scale (size) for the firm is hypothesized to result from:

Correct AnswerverifiedShow Answer

What method of inventory valuation should be used for economic decision-making problems?

Correct AnswerverifiedShow Answer

Which of the following statements concerning the short-run average cost curve of economic theory is true?

Correct AnswerverifiedShow Answer

During the last few days the Superior Company has been running into problems with its computer system.The last run of the production cost schedule resulted in the incomplete listing shown below.From your knowledge of cost theory,fill in the blanks.

Correct Answerverified * Determination of these cost...View AnswerShow Answer

The relevant cost in economic decision-making is the opportunity cost of the resources rather than the outlay of funds required to obtain the resources.

Correct AnswerverifiedShow Answer

Possible sources of economies of scale (size) within a production plant include:

Correct AnswerverifiedA

Economies of scale exist whenever long-run average costs:

Correct AnswerverifiedShow Answer

Which of the following statements about cost functions is true?

Correct AnswerverifiedShow Answer

For a short-run cost function which of the following statements is (are) not true?

Correct AnswerverifiedShow Answer

Economies of Scope refers to situations where per unit costs are:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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B

Correct Answer
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If TC = 321 + 55Q - 5Q²,then average total cost at Q = 10 is:

Correct Answer
verified

A firm has determined that its variable costs are given by the following relationship: VC = .05Q³ - 5Q² + 500Q where Q is the quantity of output produced.

Correct Answer
verified

Correct Answer
verified

Suppose that total cost is given by TC = 200 + 5Q - 0.4Q² + 0.001Q³

Correct Answer
verified
E

A cottage industry exists in the home-manufacture of 'country crafts'.Especially treasured are handmade quilts.If the fourth completed quilt took 30 hours to make,and the eighth quilt took 28 hours.What is the percentage learning? Hint: Percentage learning = 100% - (c₂/c₁) •100%.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified
* Determination of these cost...
View Answer

Correct Answer
verified

Correct Answer
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A

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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