Question 1

Production costs to an economist

Accepted Answer

A)  consist only of explicit costs.
B)  reflect opportunity costs.
C)  never reflect monetary outlays.
D)  always reflect monetary outlays.

Question 2

If the average product of labor equals 4 at all levels of output, the marginal product of labor is also equal to 4 at all levels of output.

Accepted Answer

A) True 
 B)False

Question 3

Fixed cost is

Accepted Answer

A)  the cost of producing one more unit of capital, for example, machinery.
B)  any cost that does not change when the firm changes its output.
C)  average cost multiplied by the firm's output.
D)  usually zero in the short run.

Question 4

At an output level of 50 units per day, a firm has average total costs of $60 and average variable costs of $35. Its total fixed costs are

Accepted Answer

A)  $925.
B)  $1,250.
C)  $1,750.
D)  $3,000.

Question 5

For most producing firms,

Accepted Answer

A)  marginal cost rises as output is carried to a certain level, and then begins to decline.
B)  total costs rise as output is carried to a certain level, and then begin to decline.
C)  average total costs decline as output is carried to a certain level, and then begin to rise.
D)  average total costs rise as output is carried to a certain level, and then begin to decline.

Question 6

Refer to the provided graph, which shows the total product (TP) curve. At which point is the marginal product zero?

Accepted Answer

A)  point a
B)  point b
C)  point c
D)  point d

Question 7

In the diagram, the range of diminishing marginal returns is

Accepted Answer

A)  0 Q₃.
B)  0 Q₂.
C)  Q₁ Q₂.
D)  Q₁ Q₃.

Question 8

To the economist, total cost includes

Accepted Answer

A)  explicit and implicit costs.
B)  neither implicit nor explicit costs.
C)  implicit, but not explicit, costs.
D)  explicit, but not implicit, costs.

Question 9

Refer to the graph. Which one of the following would cause a move from point b on short-run average total cost curve ATC ₁ to point e on short-run average cost curve ATC ₂?

Accepted Answer

A)  diminishing marginal returns
B)  an increase in the wage rate
C)  a decrease in the wage rate
D)  increasing marginal returns

Question 10

Marginal product of labor refers to the

Accepted Answer

A)  last unit of output produced by labor at the end of each period.
B)  increase in output resulting from employing one more unit of labor.
C)  total output divided by the number of labor employed.
D)  smallest unit of the output produced by labor.

Question 11

The range over which average variable cost is increasing is the same as the range over which

Accepted Answer

A)  marginal cost is decreasing.
B)  average fixed cost is increasing.
C)  average product is increasing.
D)  average product is decreasing.

Question 12

The law of diminishing returns indicates that

Accepted Answer

A)  as extra units of a variable resource are added to a fixed resource, marginal product will decline beyond some point.
B)  because of economies and diseconomies of scale, a competitive firm's long-run average total cost curve will be U-shaped.
C)  the demand for goods produced by purely competitive industries is downsloping.
D)  beyond some point, the extra utility derived from additional units of a product will yield the consumer smaller and smaller extra amounts of satisfaction.

Question 13

If the total cost of 20 units of a product is $20, and the total cost of 21 units is $21, then from 20 to 21 units of product the

Accepted Answer

A)  marginal cost is decreasing.
B)  marginal cost equals average total cost.
C)  marginal cost equals average variable cost.
D)  average total cost equals average variable cost.

Question 14

Answer the question on the basis of the following output data for a firm. Assume that the amounts of all nonlabor resources are fixed.  Diminishing marginal returns become evident with the addition of the

Accepted Answer

A)  sixth worker.
B)  fourth worker.
C)  third worker.
D)  second worker.

Question 15

If the price of labor or some other variable resource decreased, the

Accepted Answer

A)  AVC curve would shift upward.
B)  AFC curve would shift downward.
C)  AFC curve would shift upward.
D)  MC curve would shift downward.

Question 16

The following is cost information for the Creamy Crisp Donut Company.Entrepreneur's potential earnings as a salaried worker = $55,000Annual lease on building = $23,000Annual revenue from operations = $320,000Payments to workers = $130,000Utilities (electricity, water, disposal) costs = $8,000Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000Entrepreneur's forgone interest on personal funds used to finance the business = $6,000Creamy Crisp's accounting profit is

Accepted Answer

A)  $302,000.
B)  $161,000.
C)  $159,000.
D)  $18,000.

Question 17

Other things equal, if the wage rates paid to a firm's labor inputs were to rise, we would expect the

Accepted Answer

A)  AFC, AVC, ATC, and MC curves all to rise.
B)  AVC, ATC, and MC curves all to rise.
C)  AFC and ATC curves to fall.
D)  MP curve to fall.

Question 18

Chris is preparing for a comprehensive course exam by reading a textbook with chapters of equal length and difficulty. The number of chapters she can comprehend and master when studying is: (1) hour one, 1.5 chapters; (2) hour two, 2.0 chapters; (3) hour three, 1.5 chapters; (4) hour four, 1 chapter; (5) hour five, 0 chapters. Diminishing marginal returns to studying sets in for Chris after hour

Accepted Answer

A)  one.
B)  two.
C)  four.
D)  five.

Question 19

Answer the question on the basis of the following cost data.  The average fixed cost of producing 3 units of output is

Accepted Answer

A)  $14.
B)  $24.
C)  $16.
D)  $8.

Question 20

Economies of scale are indicated by

Accepted Answer

A)  the rising segment of the average variable cost curve.
B)  the declining segment of the long-run average total cost curve.
C)  the difference between total revenue and total cost.
D)  a rising marginal cost curve.

Exam 9: Businesses and the Costs of Production

Answer the question on the basis of the following output data for a firm. Assume that the amounts of all nonlabor resources are fixed. Diminishing marginal returns become evident with the addition of the

Correct Answer
verified

Answer the question on the basis of the following cost data. The average fixed cost of producing 3 units of output is

Correct Answer
verified

Correct Answer
verified

Production costs to an economist

Correct Answer
verified

Correct Answer
verified

Economies of scale are indicated by

Correct Answer
verified

The range over which average variable cost is increasing is the same as the range over which

Correct Answer
verified

For most producing firms,

Correct Answer
verified

Fixed cost is

Correct Answer
verified

Other things equal, if the wage rates paid to a firm's labor inputs were to rise, we would expect the

Correct Answer
verified

If the price of labor or some other variable resource decreased, the

Correct Answer
verified

To the economist, total cost includes

Correct Answer
verified

If the total cost of 20 units of a product is $20, and the total cost of 21 units is $21, then from 20 to 21 units of product the

Correct Answer
verified

Marginal product of labor refers to the

Correct Answer
verified

Refer to the provided graph, which shows the total product (TP) curve. At which point is the marginal product zero?

Correct Answer
verified

In the diagram, the range of diminishing marginal returns is

Correct Answer
verified

The law of diminishing returns indicates that

Correct Answer
verified

Refer to the graph. Which one of the following would cause a move from point b on short-run average total cost curve ATC ₁ to point e on short-run average cost curve ATC ₂?

Correct Answer
verified

At an output level of 50 units per day, a firm has average total costs of $60 and average variable costs of $35. Its total fixed costs are

Correct Answer
verified

If the average product of labor equals 4 at all levels of output, the marginal product of labor is also equal to 4 at all levels of output.

Correct Answer
verified

Exam 9: Businesses and the Costs of Production

Answer the question on the basis of the following output data for a firm. Assume that the amounts of all nonlabor resources are fixed. Diminishing marginal returns become evident with the addition of the

Correct AnswerverifiedShow Answer

Answer the question on the basis of the following cost data. The average fixed cost of producing 3 units of output is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Production costs to an economist

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Economies of scale are indicated by

Correct AnswerverifiedShow Answer

The range over which average variable cost is increasing is the same as the range over which

Correct AnswerverifiedShow Answer

For most producing firms,

Correct AnswerverifiedShow Answer

Fixed cost is

Correct AnswerverifiedShow Answer

Other things equal, if the wage rates paid to a firm's labor inputs were to rise, we would expect the

Correct AnswerverifiedShow Answer

If the price of labor or some other variable resource decreased, the

Correct AnswerverifiedShow Answer

To the economist, total cost includes

Correct AnswerverifiedShow Answer

If the total cost of 20 units of a product is $20, and the total cost of 21 units is $21, then from 20 to 21 units of product the

Correct AnswerverifiedShow Answer

Marginal product of labor refers to the

Correct AnswerverifiedShow Answer

Refer to the provided graph, which shows the total product (TP) curve. At which point is the marginal product zero?

Correct AnswerverifiedShow Answer

In the diagram, the range of diminishing marginal returns is

Correct AnswerverifiedShow Answer

The law of diminishing returns indicates that

Correct AnswerverifiedShow Answer

Refer to the graph. Which one of the following would cause a move from point b on short-run average total cost curve ATC ₁ to point e on short-run average cost curve ATC ₂?

Correct AnswerverifiedShow Answer

At an output level of 50 units per day, a firm has average total costs of $60 and average variable costs of $35. Its total fixed costs are

Correct AnswerverifiedShow Answer

If the average product of labor equals 4 at all levels of output, the marginal product of labor is also equal to 4 at all levels of output.

Correct AnswerverifiedShow Answer

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