Question 1

Figure 12-7 
-Refer to Figure 12-7.Which of the figures represents the marginal cost curve for a typical firm?

Accepted Answer

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

Question 2

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

Question 3

Table 12-8
 
-Refer to Table 12-8.What is the marginal cost of producing the fifth unit of output?

Accepted Answer

A)   $4
B)   $40
C)   $50
D)   $70E) B) and D)
F) B) and C)

Question 4

Table 12-5
 
-Refer to Table 12-5.Diminishing marginal product begins with the addition of the

Accepted Answer

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

Question 5

Which of the following expressions is correct?

Accepted Answer

A)   accounting profit = economic profit + implicit costs
B)   accounting profit = total revenue - implicit costs
C)   economic profit = accounting profit + explicit costs
D)   economic profit = total revenue - implicit costsE) All of the above
F) B) and D)

Question 6

Table 12-4
Charles's Math Tutoring
 
-Refer to Table 12-4.What is the marginal product of the second worker?

Accepted Answer

A)   15 students
B)   20 students
C)   22.5 students
D)   25 studentsE) A) and B)
F) A) and C)

Question 7

Table 12-12
Betty's Bakery
 
-Refer to Table 12-12.What is the fixed cost of production at Betty's Bakery?

Accepted Answer

A)   $12
B)   $20
C)   $25
D)   $51E) A) and B)
F) A) and C)

Question 8

A firm produces 300 units of output at a total cost of $1,000.If fixed costs are $100,

Accepted Answer

A)   average fixed cost is $10.
B)   average variable cost is $3.
C)   average total cost is $4.
D)   average total cost is $5.E) B) and C)
F) None of the above

Question 9

Table 12-3
 
-Refer to Table 12-3.If the firm can sell its output for $1 per unit,what is the profit-maximizing level of output?

Accepted Answer

A)   240 units
B)   230 units
C)   190 units
D)   170 unitsE) None of the above
F) C) and D)

Question 10

Which of the following measures of cost is best described as "the increase in total cost that arises from an extra unit of production?"

Accepted Answer

A)   variable cost
B)   average variable cost
C)   average total cost
D)   marginal costE) B) and C)
F) A) and B)

Question 11

Table 12-4
Charles's Math Tutoring
 
-Refer to Table 12-4.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) A) and C)

Question 12

Table 12-6
Wooden Chair Factory
 
-Refer to Table 12-6.Each worker at the Wooden Chair Factory costs $12 per hour.The cost of each machine is $20 per day regardless of the number of chairs produced.If the factory produces at a rate of 35 chairs per hour,what is the total labor cost per hour?

Accepted Answer

A)   $40
B)   $48
C)   $384
D)   $424E) B) and C)
F) A) and D)

Question 13

An example of an explicit cost of production would be the

Accepted Answer

A)   cost of forgone labor earnings for an entrepreneur.
B)   lost opportunity to invest in capital markets when the money is invested in one's business.
C)   lease payments for the land on which a firm's factory stands.
D)   Both a and c are correct.E) A) and C)
F) A) and D)

Question 14

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 C)

Question 15

Marginal cost equals (i) change in total cost divided by change in quantity produced.
(ii) change in variable cost divided by change in quantity produced.
(iii) the average fixed cost of the current unit.

Accepted Answer

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

Question 16

The cost of producing an additional unit of a good is not the same as the average cost of the good.

Accepted Answer

A) True 
 B)False

Question 17

Table 12-11
Teacher's Helper is a small company that has a subcontract to produce instructional materials for disabled children in public school districts.The owner rents several small rooms in an office building in the suburbs for $600 a month and has leased computer equipment that costs $480 a month.
 
-Refer to Table 12-11.What is the marginal cost of creating the tenth instructional module in a given month?

Accepted Answer

A)   $900
B)   $1,250
C)   $2,500
D)   $3,060E) B) and C)
F) A) and B)

Question 18

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) A) and B)
F) A) and C)

Question 19

For a firm,the production function represents the relationship between

Accepted Answer

A)   implicit costs and explicit costs.
B)   quantity of inputs and total cost.
C)   quantity of inputs and quantity of output.
D)   quantity of output and total cost.E) B) and C)
F) None of the above

Question 20

If a firm uses labor to produce output,the firm's production function depicts the relationship between

Accepted Answer

A)   the number of workers and the quantity of output.
B)   marginal product and marginal cost.
C)   the maximum quantity that the firm can produce as it adds more capital to a fixed quantity of labor.
D)   fixed inputs and variable inputs in the short run.E) A) and B)
F) B) and C)

Exam 12: The Costs of Production

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
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Table 12-12 Betty's Bakery -Refer to Table 12-12.What is the fixed cost of production at Betty's Bakery?

Correct Answer
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Table 12-6 Wooden Chair Factory -Refer to Table 12-6.Each worker at the Wooden Chair Factory costs $12 per hour.The cost of each machine is $20 per day regardless of the number of chairs produced.If the factory produces at a rate of 35 chairs per hour,what is the total labor cost per hour?

Correct Answer
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Figure 12-7 -Refer to Figure 12-7.Which of the figures represents the marginal cost curve for a typical firm?

Correct Answer
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Which of the following expressions is correct?

Correct Answer
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If a firm uses labor to produce output,the firm's production function depicts the relationship between

Correct Answer
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Table 12-8 -Refer to Table 12-8.What is the marginal cost of producing the fifth unit of output?

Correct Answer
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Table 12-3 -Refer to Table 12-3.If the firm can sell its output for $1 per unit,what is the profit-maximizing level of output?

Correct Answer
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Table 12-5 -Refer to Table 12-5.Diminishing marginal product begins with the addition of the

Correct Answer
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An example of an explicit cost of production would be the

Correct Answer
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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
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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 Answer
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Marginal cost equals (i) change in total cost divided by change in quantity produced. (ii) change in variable cost divided by change in quantity produced. (iii) the average fixed cost of the current unit.

Correct Answer
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The cost of producing an additional unit of a good is not the same as the average cost of the good.

Correct Answer
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Table 12-4 Charles's Math Tutoring -Refer to Table 12-4.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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Correct Answer
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Which of the following measures of cost is best described as "the increase in total cost that arises from an extra unit of production?"

Correct Answer
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For a firm,the production function represents the relationship between

Correct Answer
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A firm produces 300 units of output at a total cost of $1,000.If fixed costs are $100,

Correct Answer
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Table 12-4 Charles's Math Tutoring -Refer to Table 12-4.What is the marginal product of the second worker?

Correct Answer
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Exam 12: The Costs of Production

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 AnswerverifiedShow Answer

Table 12-12 Betty's Bakery -Refer to Table 12-12.What is the fixed cost of production at Betty's Bakery?

Correct AnswerverifiedShow Answer

Table 12-6 Wooden Chair Factory -Refer to Table 12-6.Each worker at the Wooden Chair Factory costs $12 per hour.The cost of each machine is $20 per day regardless of the number of chairs produced.If the factory produces at a rate of 35 chairs per hour,what is the total labor cost per hour?

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Figure 12-7 -Refer to Figure 12-7.Which of the figures represents the marginal cost curve for a typical firm?

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Which of the following expressions is correct?

Correct AnswerverifiedShow Answer

If a firm uses labor to produce output,the firm's production function depicts the relationship between

Correct AnswerverifiedShow Answer

Table 12-8 -Refer to Table 12-8.What is the marginal cost of producing the fifth unit of output?

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Table 12-3 -Refer to Table 12-3.If the firm can sell its output for $1 per unit,what is the profit-maximizing level of output?

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Table 12-5 -Refer to Table 12-5.Diminishing marginal product begins with the addition of the

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An example of an explicit cost of production would be the

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

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

Marginal cost equals (i) change in total cost divided by change in quantity produced. (ii) change in variable cost divided by change in quantity produced. (iii) the average fixed cost of the current unit.

Correct AnswerverifiedShow Answer

The cost of producing an additional unit of a good is not the same as the average cost of the good.

Correct AnswerverifiedShow Answer

Table 12-4 Charles's Math Tutoring -Refer to Table 12-4.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 AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following measures of cost is best described as "the increase in total cost that arises from an extra unit of production?"

Correct AnswerverifiedShow Answer

For a firm,the production function represents the relationship between

Correct AnswerverifiedShow Answer

A firm produces 300 units of output at a total cost of $1,000.If fixed costs are $100,

Correct AnswerverifiedShow Answer

Table 12-4 Charles's Math Tutoring -Refer to Table 12-4.What is the marginal product of the second worker?

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