Question 1

Adam Smith's example of the pin factory demonstrates that economies of scale result from specialization.

Accepted Answer

A) True 
 B)False

Question 2

Average total cost will increase if .

Accepted Answer

marginal c...

Question 3

Jacqui decides to open her own business and earns $50,000 in accounting profit the first year. When deciding to open her own business, she turned down three separate job offers with annual salaries of $30,000, $40,000, and $45,000. What is Jacqui's economic profit from running her own business?

Accepted Answer

A)   $-55,000
B)   $-5,000
C)   $5,000
D)   $20,000E) A) and B)
F) All of the above

Question 4

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) None of the above
F) C) and D)

Question 5

Total revenue equals

Accepted Answer

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

Question 6

In the short run, a firm that produces and sells house paint can adjust

Accepted Answer

A)   where to produce along its long-run average-total-cost curve.
B)   the size of its factories.
C)   how many workers to hire.
D)   All of the above are correct.E) B) and D)
F) C) and D)

Question 7

Billy's Bean Bag Emporium produced 300 bean bag chairs but sold only 275 of the units it produced. The average cost of production for each unit of output produced was $100. The price for each of the 275 units sold was $95. Total profit for Billy's Bean Bag Emporium would be

Accepted Answer

A)   -$3,875.
B)   $26,125.
C)   $28,500.
D)   $30,000.E) B) and C)
F) All of the above

Question 8

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) C) and D)
F) A) and C)

Question 9

Define profit.

Accepted Answer

Profit = T...

Question 10

The Carolina Christmas Tree Corporation grows and sells 500 Christmas trees. The average cost of production per tree is $50. Each tree sells for a price of $65. The Carolina Christmas Tree Corporation's total revenues are

Accepted Answer

A)   $7,500.
B)   $25,000.
C)   $32,500.
D)   $67,500.E) A) and C)
F) A) and B)

Question 11

Kate is a florist. Kate can arrange 20 bouquets per day. She is considering hiring her husband William to work for her. Together Kate and William can arrange 35 bouquets per day. What is William's marginal product?

Accepted Answer

A)   55 bouquets
B)   35 bouquets
C)   22.5 bouquets
D)   15 bouquetsE) B) and C)
F) A) and B)

Question 12

Table 13-18
 
-Refer to Table 13-18. What is the average total cost of producing 525 units of output?

Accepted Answer

ATC = TC/Q...

Question 13

When a firm is experiencing diseconomies 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) None of the above
F) C) and D)

Question 14

Let L represent the number of workers hired by a firm, and let Q represent that firm's quantity of output. Assume two points on the firm's production function are L=6,Q=147)  and L=7,Q=184) . The marginal product of the seventh worker is

Accepted Answer

A)   25 units of output.
B)   27 units of output.
C)   37 units of output.
D)   184 units of output.E) B) and D)
F) All of the above

Question 15

The use of specialization to achieve economies of scale is one reason modern societies are as prosperous as they are.

Accepted Answer

A) True 
 B)False

Question 16

The difference between accounting profit and economic profit is

Accepted Answer

A)   explicit costs.
B)   implicit costs.
C)   total revenue.
D)   marginal product.E) B) and D)
F) None of the above

Question 17

Table 13-17
Consider the following table of long-run total cost for four different firms:
 
-Refer to Table 13-17. Which firm has constant returns to scale over the entire range of output?

Accepted Answer

A)   Firm 1
B)   Firm 2
C)   Firm 3
D)   Firm 4E) C) and D)
F) B) and D)

Question 18

Pete owns a shoe-shine business. Which of the following costs would be implicit costs? i)  shoe polish
Ii)  rent on the shoe stand
Iii)  wages Pete could earn delivering newspapers
Iv)  interest that Pete's money was earning before he spent his savings to set up the shoe­shine business

Accepted Answer

A)   i)  and ii)  only
B)   iv)  only
C)   iii)  and iv)  only
D)   i) , ii) , iii) , and iv) E) C) and D)
F) All of the above

Question 19

When the marginal product of an input declines as the quantity of that input increases, the production function exhibits

Accepted Answer

A)   increasing marginal product.
B)   diminishing marginal product.
C)   diminishing total product.
D)   Both b and c are correct.E) All of the above
F) A) and B)

Question 20

Consider a small family wheat farm. List some examples of explicit costs of farming.

Accepted Answer

seeds, fertilizer, pesticide, ...

Exam 12: The Costs of Production

Consider a small family wheat farm. List some examples of explicit costs of farming.

Correct Answerverifiedseeds, fertilizer, pesticide, ...View AnswerShow Answer

In the short run, a firm that produces and sells house paint can adjust

Correct AnswerverifiedShow Answer

Total revenue equals

Correct AnswerverifiedShow Answer

The Carolina Christmas Tree Corporation grows and sells 500 Christmas trees. The average cost of production per tree is $50. Each tree sells for a price of $65. The Carolina Christmas Tree Corporation's total revenues are

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 AnswerverifiedShow Answer

Adam Smith's example of the pin factory demonstrates that economies of scale result from specialization.

Correct AnswerverifiedShow Answer

The use of specialization to achieve economies of scale is one reason modern societies are as prosperous as they are.

Correct AnswerverifiedShow Answer

Define profit.

Correct AnswerverifiedProfit = T...View AnswerShow Answer

Pete owns a shoe-shine business. Which of the following costs would be implicit costs? i) shoe polish Ii) rent on the shoe stand Iii) wages Pete could earn delivering newspapers Iv) interest that Pete's money was earning before he spent his savings to set up the shoe­shine business

Correct AnswerverifiedShow Answer

Billy's Bean Bag Emporium produced 300 bean bag chairs but sold only 275 of the units it produced. The average cost of production for each unit of output produced was $100. The price for each of the 275 units sold was $95. Total profit for Billy's Bean Bag Emporium would be

Correct AnswerverifiedShow Answer

Table 13-18 -Refer to Table 13-18. What is the average total cost of producing 525 units of output?

Correct AnswerverifiedATC = TC/Q...View AnswerShow Answer

Jacqui decides to open her own business and earns $50,000 in accounting profit the first year. When deciding to open her own business, she turned down three separate job offers with annual salaries of $30,000, $40,000, and $45,000. What is Jacqui's economic profit from running her own business?

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 AnswerverifiedShow Answer

Average total cost will increase if .

Correct Answerverifiedmarginal c...View AnswerShow Answer

The difference between accounting profit and economic profit is

Correct AnswerverifiedShow Answer

Kate is a florist. Kate can arrange 20 bouquets per day. She is considering hiring her husband William to work for her. Together Kate and William can arrange 35 bouquets per day. What is William's marginal product?

Correct AnswerverifiedShow Answer

Let L represent the number of workers hired by a firm, and let Q represent that firm's quantity of output. Assume two points on the firm's production function are L=6,Q=147) and L=7,Q=184) . The marginal product of the seventh worker is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Table 13-17 Consider the following table of long-run total cost for four different firms: -Refer to Table 13-17. Which firm has constant returns to scale over the entire range of output?

Correct AnswerverifiedShow Answer

When the marginal product of an input declines as the quantity of that input increases, the production function exhibits

Correct AnswerverifiedShow Answer

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seeds, fertilizer, pesticide, ...
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Profit = T...
View Answer

Pete owns a shoe-shine business. Which of the following costs would be implicit costs? i) shoe polish Ii) rent on the shoe stand Iii) wages Pete could earn delivering newspapers Iv) interest that Pete's money was earning before he spent his savings to set up the shoeshine business

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ATC = TC/Q...
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marginal c...
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