Question 1

Economic profit is greater than or equal to accounting profit.

Accepted Answer

A) True 
 B)False

Question 2

The opportunity cost of capital is an implicit cost almost every business incurs.

Accepted Answer

A) True 
 B)False

Question 3

The marginal product of labor can be defined as the change in

Accepted Answer

A)   profit divided by the change in labor.
B)   output divided by the change in labor.
C)   labor divided by the change in output.
D)   labor divided by the change in total cost.E) A) and C)
F) All of the above

Question 4

If a production function shows declining marginal product of an input as the quantity of the input increases, then the production function exhibits

Accepted Answer

A)   diminishing profitability.
B)   increasing returns to scale.
C)   increasing marginal product.
D)   decreasing marginal product.E) B) and D)
F) B) and C)

Question 5

Constant returns to scale occur when the firm's long­run

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) A) and D)
F) All of the above

Question 6

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 economies of scale.

Accepted Answer

A) True 
 B)False

Question 7

Scenario 13-6
Ziva is an organic lettuce farmer, but she also spends part of her day as a professional organizing consultant. As a consultant, Ziva helps people organize their houses. Due to the popularity of her home-organization services, Farmer Ziva has more clients requesting her services than she has time to help if she maintains her farming business. Farmer Ziva charges $25 an hour for her home-organization services. One spring day, Ziva spends 10 hours in her fields planting $130 worth of seeds on her farm. She expects that the seeds she planted will yield $300 worth of lettuce.
-Refer to Scenario 13-6. Ziva's accounting profit from farming equals

Accepted Answer

A)   $-80.
B)   $130.
C)   $170.
D)   $260.E) C) and D)
F) None of the above

Question 8

Describe the relationship between average total cost and marginal cost.

Accepted Answer

If marginal cost MC) is greater than ave...

Question 9

To an economist, the field of industrial organization answers which of the following questions?

Accepted Answer

A)   Why are consumers subject to the law of demand?
B)   Why do firms experience diminishing marginal productivities of their inputs?
C)   How does the number of firms affect prices and the efficiency of market outcomes?
D)   How can government intervention improve industrial production when externalities are present?E) C) and D)
F) B) and D)

Question 10

In the long run,

Accepted Answer

A)   inputs that were fixed in the short run remain fixed.
B)   inputs that were fixed in the short run become variable.
C)   inputs that were variable in the short run become fixed.
D)   variable inputs are rarely used.E) All of the above
F) A) and B)

Question 11

Scenario 13-8
Wanda owns a lemonade stand. She produces lemonade using five inputs: water, sugar, lemons, paper cups, and labor. Her costs per glass are as follows: $0.01 for water, $0.02 for sugar, $0.03 for lemons, $0.02 for cups, and $0.10 for the opportunity cost of her labor. She can sell 300 glasses for $0.50 each.
-Refer to Scenario 13-8. What are Wanda's implicit costs per glass?

Accepted Answer

A)   $0.18
B)   $0.10
C)   $0.08
D)   $0.02E) B) and D)
F) B) and C)

Question 12

Figure 13-3 
-Refer to Figure 13-3. Assuming that the firm depicted produces cookies, which of the statements below is most consistent with the shape of the total cost curve?

Accepted Answer

A)   Producing an additional cookie is always more costly than producing the previous cookie.
B)   Total production of cookies decreases with additional units of input.
C)   Producing additional cookies is equally costly, regardless of how many cookies are already being produced.
D)   Producing additional cookies becomes increasingly costly only when the number of cookies already being produced is large.E) A) and D)
F) C) and D)

Question 13

The amount of money that a firm pays to buy inputs is called

Accepted Answer

A)   total cost.
B)   variable cost.
C)   marginal cost.
D)   fixed cost.E) A) and B)
F) C) and D)

Question 14

Describe the relationship between average variable cost and marginal cost.

Accepted Answer

If marginal cost MC) is greater than ave...

Question 15

The length of the short run

Accepted Answer

A)   is different for different types of firms.
B)   can never exceed 3 years.
C)   can never exceed 1 year.
D)   is always less than 6 months.E) A) and D)
F) A) and B)

Question 16

The marginal-cost curve intersects the average-total-cost curve at the output level where average fixed costs are zero.

Accepted Answer

A) True 
 B)False

Question 17

Scenario 13-11
Walter builds birdhouses. He spends $5 on the materials for each birdhouse. He can build one in 30 minutes. He is semi-retired but earns $8 per hour at the local hardware store. He can sell a birdhouse for $20 each.
-Refer to Scenario 13-11. The implicit cost for one birdhouse is

Accepted Answer

A)   $4.
B)   $5.
C)   $8.
D)   $9.E) A) and B)
F) All of the above

Question 18

Analyzing the behavior of the firm enhances our understanding of

Accepted Answer

A)   what decisions lie behind the market supply curve.
B)   how consumers allocate their income to purchase scarce resources.
C)   how financial institutions set interest rates.
D)   whether resources are allocated fairly.E) A) and B)
F) B) and C)

Question 19

Describe how an accounting firm could experience diseconomies of scale.

Accepted Answer

Problems with coordination can cause dis...

Question 20

The typical total-cost curve is U-shaped.

Accepted Answer

A) True 
 B)False

Exam 12: The Costs of Production

The opportunity cost of capital is an implicit cost almost every business incurs.

Correct Answer
verified

The marginal-cost curve intersects the average-total-cost curve at the output level where average fixed costs are zero.

Correct Answer
verified

Economic profit is greater than or equal to accounting profit.

Correct Answer
verified

Figure 13-3 -Refer to Figure 13-3. Assuming that the firm depicted produces cookies, which of the statements below is most consistent with the shape of the total cost curve?

Correct Answer
verified

The marginal product of labor can be defined as the change in

Correct Answer
verified

Constant returns to scale occur when the firm's longrun

Correct Answer
verified

Correct Answer
verified

In the long run,

Correct Answer
verified

Correct Answer
verified

The length of the short run

Correct Answer
verified

Analyzing the behavior of the firm enhances our understanding of

Correct Answer
verified

Scenario 13-11 Walter builds birdhouses. He spends $5 on the materials for each birdhouse. He can build one in 30 minutes. He is semi-retired but earns $8 per hour at the local hardware store. He can sell a birdhouse for $20 each. -Refer to Scenario 13-11. The implicit cost for one birdhouse is

Correct Answer
verified

To an economist, the field of industrial organization answers which of the following questions?

Correct Answer
verified

Describe the relationship between average variable cost and marginal cost.

Correct Answer
verified
If marginal cost MC) is greater than ave...
View Answer

Describe the relationship between average total cost and marginal cost.

Correct Answer
verified
If marginal cost MC) is greater than ave...
View Answer

Describe how an accounting firm could experience diseconomies of scale.

Correct Answer
verified
Problems with coordination can cause dis...
View 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 economies of scale.

Correct Answer
verified

If a production function shows declining marginal product of an input as the quantity of the input increases, then the production function exhibits

Correct Answer
verified

The amount of money that a firm pays to buy inputs is called

Correct Answer
verified

The typical total-cost curve is U-shaped.

Correct Answer
verified

Exam 12: The Costs of Production

The opportunity cost of capital is an implicit cost almost every business incurs.

Correct AnswerverifiedShow Answer

The marginal-cost curve intersects the average-total-cost curve at the output level where average fixed costs are zero.

Correct AnswerverifiedShow Answer

Economic profit is greater than or equal to accounting profit.

Correct AnswerverifiedShow Answer

Figure 13-3 -Refer to Figure 13-3. Assuming that the firm depicted produces cookies, which of the statements below is most consistent with the shape of the total cost curve?

Correct AnswerverifiedShow Answer

The marginal product of labor can be defined as the change in

Correct AnswerverifiedShow Answer

Constant returns to scale occur when the firm's long­run

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In the long run,

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The length of the short run

Correct AnswerverifiedShow Answer

Analyzing the behavior of the firm enhances our understanding of

Correct AnswerverifiedShow Answer

Scenario 13-11 Walter builds birdhouses. He spends $5 on the materials for each birdhouse. He can build one in 30 minutes. He is semi-retired but earns $8 per hour at the local hardware store. He can sell a birdhouse for $20 each. -Refer to Scenario 13-11. The implicit cost for one birdhouse is

Correct AnswerverifiedShow Answer

To an economist, the field of industrial organization answers which of the following questions?

Correct AnswerverifiedShow Answer

Describe the relationship between average variable cost and marginal cost.

Correct AnswerverifiedIf marginal cost MC) is greater than ave...View AnswerShow Answer

Describe the relationship between average total cost and marginal cost.

Correct AnswerverifiedIf marginal cost MC) is greater than ave...View AnswerShow Answer

Describe how an accounting firm could experience diseconomies of scale.

Correct AnswerverifiedProblems with coordination can cause dis...View AnswerShow 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 economies of scale.

Correct AnswerverifiedShow Answer

If a production function shows declining marginal product of an input as the quantity of the input increases, then the production function exhibits

Correct AnswerverifiedShow Answer

The amount of money that a firm pays to buy inputs is called

Correct AnswerverifiedShow Answer

The typical total-cost curve is U-shaped.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
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Constant returns to scale occur when the firm's longrun

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

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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If marginal cost MC) is greater than ave...
View Answer

Correct Answer
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If marginal cost MC) is greater than ave...
View Answer

Correct Answer
verified
Problems with coordination can cause dis...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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