Question 1

Jane was a partner at a law firm earning $223,000 per year.She left the firm to open her own law practice.In the first year of business she generated revenues of $347,000 and incurred explicit costs of $163,000.Jane's economic profit from her first year in her own practice is

Accepted Answer

A)   -$39,000.
B)   $124,000.
C)   $163,000.
D)   $184,000.E) B) and C)
F) A) and D)

Question 2

Table 13-12
Betty's Bakery
 
-Refer to Table 13-12.What is the marginal cost of the 4th cake at Betty's Bakery?

Accepted Answer

A)   $13
B)   $15
C)   $19
D)   $64E) All of the above
F) None of the above

Question 3

Scenario 13-16
A certain firm produces and sells staplers. Last year, it produced 7,000 staplers and sold each stapler for $6. In producing the 7,000 staplers, it incurred variable costs of $28,000 and a total cost of $45,000.
-Refer to Scenario 13-16.In producing the 7,000 staplers,the firm's average total cost was

Accepted Answer

A)   $2.43.
B)   $4.00.
C)   $6.00.
D)   $6.43.E) A) and B)
F) None of the above

Question 4

The value of a business owner's time is an example of

Accepted Answer

A)   an opportunity cost.
B)   a fixed cost.
C)   an explicit cost.
D)   total revenue.E) All of the above
F) C) and D)

Question 5

Table 13-5
 
-Refer to Table 13-5.Diminishing marginal product begins with the addition of the

Accepted Answer

A)   second worker.
B)   third worker.
C)   fourth worker.
D)   fifth worker.E) C) and D)
F) All of the above

Question 6

Figure 13-5
 
-Refer to Figure 13-5.Curve A is always declining because

Accepted Answer

A)   of diminishing marginal product.
B)   we are dividing fixed costs by higher and higher levels of output.
C)   marginal product first increases, then decreases.
D)   marginal product first decreases, then increases.E) None of the above
F) A) and B)

Question 7

Scenario 13-17
Suppose that a given firm experiences decreasing marginal product of labor with the addition of each worker regardless of the current output level.
-Refer to Scenario 13-17.Average variable cost will be

Accepted Answer

A)   rising at all points.
B)   falling at all points.
C)   U-shaped.
D)   constant.E) A) and D)
F) A) and B)

Question 8

Table 13-4
Charles's Math Tutoring
 
-Refer to Table 13-4.Suppose that Charles's math tutoring company has a fixed cost of $50 per month for his cell phone.Each worker costs Charles $60 per day.As output increases from 45 to 70 students,Charles's total cost curve

Accepted Answer

A)   increases but gets flatter.
B)   increases and gets steeper.
C)   decreases and gets flatter.
D)   decreases but gets steeper.E) A) and B)
F) B) and D)

Question 9

Suppose that for a particular firm the only variable input into the production process is labor and that output equals zero when no workers are hired.In addition,suppose that when the firm hires 2 workers,the total cost of production is $100.When the firm hires 3 workers,the total cost of production is $120.In addition,assume that the variable cost per unit of labor is the same regardless of the number of units of labor that are hired.What is the firm's fixed cost?

Accepted Answer

A)   $40
B)   $60
C)   $80
D)   $100E) A) and D)
F) A) and B)

Question 10

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

Accepted Answer

A)   Firm 1 only
B)   Firms 1 and 2 only
C)   Firm 3 only
D)   Firm 4 onlyE) A) and C)
F) B) and D)

Question 11

Table 13-7
The Flying Elvis Copter Rides
 
-Refer to Table 13-7.What is the value of Q?

Accepted Answer

A)   $16.67
B)   $50
C)   $136.67
D)   $360E) A) and D)
F) None of the above

Question 12

A difference between explicit and implicit costs is that

Accepted Answer

A)   explicit costs must be greater than implicit costs.
B)   explicit costs do not require a direct monetary outlay by the firm, whereas implicit costs do.
C)   implicit costs do not require a direct monetary outlay by the firm, whereas explicit costs do.
D)   implicit costs must be greater than explicit costs.E) A) and B)
F) None of the above

Question 13

The minimum points of the average variable cost and average total cost curves occur where the

Accepted Answer

A)   marginal cost curve lies below the average variable cost and average total cost curves.
B)   marginal cost curve intersects those curves.
C)   average variable cost and average total cost curves intersect.
D)   slope of total cost is the smallest.E) C) and D)
F) B) and C)

Exam 13: The Costs of Production.

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The minimum points of the average variable cost and average total cost curves occur where the

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Table 13-5 -Refer to Table 13-5.Diminishing marginal product begins with the addition of the

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

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Figure 13-5 -Refer to Figure 13-5.Curve A is always declining because

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A difference between explicit and implicit costs is that

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Table 13-7 The Flying Elvis Copter Rides -Refer to Table 13-7.What is the value of Q?

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Table 13-4 Charles's Math Tutoring -Refer to Table 13-4.Suppose that Charles's math tutoring company has a fixed cost of $50 per month for his cell phone.Each worker costs Charles $60 per day.As output increases from 45 to 70 students,Charles's total cost curve

Correct Answer
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Scenario 13-17 Suppose that a given firm experiences decreasing marginal product of labor with the addition of each worker regardless of the current output level. -Refer to Scenario 13-17.Average variable cost will be

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Jane was a partner at a law firm earning $223,000 per year.She left the firm to open her own law practice.In the first year of business she generated revenues of $347,000 and incurred explicit costs of $163,000.Jane's economic profit from her first year in her own practice is

Correct Answer
verified

Table 13-12 Betty's Bakery -Refer to Table 13-12.What is the marginal cost of the 4th cake at Betty's Bakery?

Correct Answer
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The value of a business owner's time is an example of

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Exam 13: The Costs of Production.

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The minimum points of the average variable cost and average total cost curves occur where the

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Table 13-5 -Refer to Table 13-5.Diminishing marginal product begins with the addition of the

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

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Figure 13-5 -Refer to Figure 13-5.Curve A is always declining because

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A difference between explicit and implicit costs is that

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Table 13-7 The Flying Elvis Copter Rides -Refer to Table 13-7.What is the value of Q?

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Table 13-4 Charles's Math Tutoring -Refer to Table 13-4.Suppose that Charles's math tutoring company has a fixed cost of $50 per month for his cell phone.Each worker costs Charles $60 per day.As output increases from 45 to 70 students,Charles's total cost curve

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Scenario 13-17 Suppose that a given firm experiences decreasing marginal product of labor with the addition of each worker regardless of the current output level. -Refer to Scenario 13-17.Average variable cost will be

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Jane was a partner at a law firm earning $223,000 per year.She left the firm to open her own law practice.In the first year of business she generated revenues of $347,000 and incurred explicit costs of $163,000.Jane's economic profit from her first year in her own practice is

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Table 13-12 Betty's Bakery -Refer to Table 13-12.What is the marginal cost of the 4th cake at Betty's Bakery?

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The value of a business owner's time is an example of

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