Question 1

Average total cost is very high when a small amount of output is produced because

Accepted Answer

A)   average variable cost is high.
B)   average fixed cost is high.
C)   marginal cost is high.
D)   marginal product is high.E) None of the above
F) B) and C)

Question 2

Marginal cost is equal to average total cost when

Accepted Answer

A)   average variable cost is falling.
B)   average fixed cost is rising.
C)   marginal cost is at its minimum.
D)   average total cost is at its minimum.E) A) and B)
F) All of the above

Question 3

Economists and accountants both include forgone income as a cost to a small business owner.

Accepted Answer

A) True 
 B)False

Question 4

Scenario 12-6
Tony is a wheat farmer,but he also spends part of his day teaching guitar lessons.Due to the popularity of his local country western band,Farmer Tony has more students requesting lessons than he has time for if he is to also maintain his farming business.Farmer Tony charges $25 an hour for his guitar lessons.One spring day,he spends 10 hours in his fields planting $130 worth of seeds on his farm.He expects that the seeds he planted will yield $300 worth of wheat.
-Refer to Scenario 12-6.Tony's economic profit equals

Accepted Answer

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

Question 5

An entrepreneur's motivation to start a business arises from

Accepted Answer

A)   an innate love for the type of business that he or she starts.
B)   a desire to earn a profit.
C)   an altruistic desire to provide the world with a good product.
D)   All of the above could be correct.E) A) and C)
F) None of the above

Question 6

Average total cost is equal to

Accepted Answer

A)   output/total cost.
B)   total cost - total quantity of output.
C)   average variable cost + total fixed cost.
D)   total cost/output.E) B) and D)
F) A) and B)

Question 7

Table 12-15
Consider the following table of long-run total cost for four different firms:
 
-Refer to Table 12-13.Which firm has economies of scale over the entire range of output?

Accepted Answer

A)   Firm 1 only
B)   Firms 1 and 2 only
C)   Firm 2 only
D)   Firm 3 onlyE) All of the above
F) None of the above

Question 8

Which of the following would be an example of an implicit cost? (i) forgone investment opportunities
(ii) wages of workers
(iii) raw materials costs

Accepted Answer

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

Question 9

Table 12-2
 
-Refer to Table 12-2.What is the marginal product of the third worker?

Accepted Answer

A)   250 units
B)   200 units
C)   150 units
D)   50 unitsE) A) and D)
F) B) and D)

Question 10

Table 12-12
Betty's Bakery
 
-Refer to Table 12-12.What is the variable cost of producing 8 cakes at Betty's Bakery?

Accepted Answer

A)   $120
B)   $140
C)   $155
D)   $160E) C) and D)
F) None of the above

Question 11

For a construction company that builds houses,which of the following costs would be a fixed cost?

Accepted Answer

A)   the $50,000 per year salary paid to a construction foreman
B)   the $30,000 per year salary paid to the company's bookkeeper
C)   the $10,000 per year premium paid to an insurance company
D)   All of the above are correct.E) B) and C)
F) A) and D)

Question 12

Some costs do not vary with the quantity of output produced.Those costs are called

Accepted Answer

A)   marginal costs.
B)   average costs.
C)   fixed costs.
D)   explicit costs.E) None of the above
F) A) and B)

Question 13

In the long run Willie's Chocolate Factory incurs total costs of $2,500 when output is 1,250 units and $2,750 when output is 1,500 units.For this range of output,Willie's exhibits

Accepted Answer

A)   economies of scale.
B)   constant returns to scale.
C)   diseconomies of scale.
D)   efficient scale.E) A) and B)
F) A) and C)

Question 14

Table 12-1
 
-Refer to Table 12-1.What is total output when 2 workers are hired?

Accepted Answer

A)   10
B)   40
C)   70
D)   120E) A) and D)
F) A) and C)

Question 15

If marginal cost is equal to average total cost,then

Accepted Answer

A)   marginal cost is minimized.
B)   average total cost is minimized.
C)   average variable cost is minimized.
D)   marginal cost is zero.E) A) and B)
F) A) and C)

Question 16

Table 12-9
 
-Refer to Table 12-9.The average fixed cost of producing 5 posters is

Accepted Answer

A)   $1.00.
B)   $2.00.
C)   $3.00.
D)   $5.00.E) All of the above
F) None of the above

Question 17

Table 12-12
Betty's Bakery
 
-Refer to Table 12-12.What is the marginal cost of the 8th cake at Betty's Bakery?

Accepted Answer

A)   $20
B)   $27
C)   $160
D)   $185E) None of the above
F) B) and C)

Question 18

The average-total-cost curve reflects the shape of both the average-fixed-cost and average-variable-cost curves.

Accepted Answer

A) True 
 B)False

Question 19

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 20

Diminishing marginal product exists when the total cost curve becomes horizontal as outputs increases.

Accepted Answer

A) True 
 B)False

Exam 12: The Costs of Production

If marginal cost is equal to average total cost,then

Correct Answer
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The average-total-cost curve reflects the shape of both the average-fixed-cost and average-variable-cost curves.

Correct Answer
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Average total cost is very high when a small amount of output is produced because

Correct Answer
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Table 12-15 Consider the following table of long-run total cost for four different firms: -Refer to Table 12-13.Which firm has economies of scale over the entire range of output?

Correct Answer
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Table 12-1 -Refer to Table 12-1.What is total output when 2 workers are hired?

Correct Answer
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Table 12-12 Betty's Bakery -Refer to Table 12-12.What is the variable cost of producing 8 cakes at Betty's Bakery?

Correct Answer
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Economists and accountants both include forgone income as a cost to a small business owner.

Correct Answer
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In the long run Willie's Chocolate Factory incurs total costs of $2,500 when output is 1,250 units and $2,750 when output is 1,500 units.For this range of output,Willie's exhibits

Correct Answer
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Correct Answer
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Table 12-9 -Refer to Table 12-9.The average fixed cost of producing 5 posters is

Correct Answer
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Table 12-2 -Refer to Table 12-2.What is the marginal product of the third worker?

Correct Answer
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Which of the following would be an example of an implicit cost? (i) forgone investment opportunities (ii) wages of workers (iii) raw materials costs

Correct Answer
verified

For a construction company that builds houses,which of the following costs would be a fixed cost?

Correct Answer
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Average total cost is equal to

Correct Answer
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Diminishing marginal product exists when the total cost curve becomes horizontal as outputs increases.

Correct Answer
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Marginal cost is equal to average total cost when

Correct Answer
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Table 12-12 Betty's Bakery -Refer to Table 12-12.What is the marginal cost of the 8th cake at Betty's Bakery?

Correct Answer
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Some costs do not vary with the quantity of output produced.Those costs are called

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

An entrepreneur's motivation to start a business arises from

Correct Answer
verified

Exam 12: The Costs of Production

If marginal cost is equal to average total cost,then

Correct AnswerverifiedShow Answer

The average-total-cost curve reflects the shape of both the average-fixed-cost and average-variable-cost curves.

Correct AnswerverifiedShow Answer

Average total cost is very high when a small amount of output is produced because

Correct AnswerverifiedShow Answer

Table 12-15 Consider the following table of long-run total cost for four different firms: -Refer to Table 12-13.Which firm has economies of scale over the entire range of output?

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Table 12-1 -Refer to Table 12-1.What is total output when 2 workers are hired?

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Table 12-12 Betty's Bakery -Refer to Table 12-12.What is the variable cost of producing 8 cakes at Betty's Bakery?

Correct AnswerverifiedShow Answer

Economists and accountants both include forgone income as a cost to a small business owner.

Correct AnswerverifiedShow Answer

In the long run Willie's Chocolate Factory incurs total costs of $2,500 when output is 1,250 units and $2,750 when output is 1,500 units.For this range of output,Willie's exhibits

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 12-9 -Refer to Table 12-9.The average fixed cost of producing 5 posters is

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Table 12-2 -Refer to Table 12-2.What is the marginal product of the third worker?

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Which of the following would be an example of an implicit cost? (i) forgone investment opportunities (ii) wages of workers (iii) raw materials costs

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For a construction company that builds houses,which of the following costs would be a fixed cost?

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Average total cost is equal to

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Diminishing marginal product exists when the total cost curve becomes horizontal as outputs increases.

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Marginal cost is equal to average total cost when

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Table 12-12 Betty's Bakery -Refer to Table 12-12.What is the marginal cost of the 8th cake at Betty's Bakery?

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Some costs do not vary with the quantity of output produced.Those costs are called

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

Correct AnswerverifiedShow Answer

An entrepreneur's motivation to start a business arises from

Correct AnswerverifiedShow Answer

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