Question 1

Suppose that a worker can produce 100 units of output in 7 hours.In the 8th hour,he can produce 12 units of output.The worker can produce 112 units of output in 8 hours.

Accepted Answer

A) True 
 B)False

Question 2

Figure 13-3
 
-Refer to Figure 13-3.The graph illustrates a typical

Accepted Answer

A)   total-cost curve.
B)   production function.
C)   production possibilities frontier.
D)   fixed-cost curve.E) A) and D)
F) None of the above

Question 3

Figure 13-8
 
-Refer to Figure 13-8.Quantity C represents the output level where the firm

Accepted Answer

A)   maximizes profits.
B)   minimizes total costs.
C)   produces at the efficient scale.
D)   minimizes marginal costs.E) A) and C)
F) None of the above

Question 4

Average variable cost is equal to total variable cost divided by quantity of output.

Accepted Answer

A) True 
 B)False

Question 5

Figure 13-7
 
-Refer to Figure 13-7.Which of the figures represents the total cost curve for a typical firm?

Accepted Answer

A)   Figure 1
B)   Figure 2
C)   Figure 3
D)   Figure 4E) None of the above
F) C) and D)

Question 6

Explicit costs

Accepted Answer

A)   require an outlay of money by the firm.
B)   include all of the firm's opportunity costs.
C)   include the value of the business owner's time.
D)   Both b and c are correct.E) B) and C)
F) A) and B)

Question 7

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 = 5,Q = 125) and (L = 6,Q = 162) .Then the marginal product of the 6th worker is

Accepted Answer

A)   25 units of output.
B)   27 units of output.
C)   37 units of output.
D)   162 units of output.E) A) and B)
F) A) and C)

Question 8

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 9

Which of the following is an example of an implicit cost?

Accepted Answer

A)   salaries paid to owners who work for the firm
B)   interest on money borrowed to finance equipment purchases
C)   cash payments for raw materials
D)   foregone rent on office space owned and used by the firmE) B) and D)
F) A) and B)

Question 10

Adam Smith describes a visit to a car factory when discussing economies of scale in his book An Inquiry into the Nature and Causes of the Wealth of Nations.

Accepted Answer

A) True 
 B)False

Question 11

Total cost is the

Accepted Answer

A)   amount a firm receives for the sale of its output.
B)   fixed cost less variable cost.
C)   market value of the inputs a firm uses in production.
D)   quantity of output minus the quantity of inputs used to make a good.E) A) and B)
F) B) and D)

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Eldin is a house painter.He can paint three houses per week.He is considering hiring his friend Murphy.Murphy can paint five houses per week.What is the maximum total output possible if Eldin hires Murphy?

Accepted Answer

A)   2 houses
B)   3 houses
C)   5 houses
D)   8 housesE) A) and B)
F) A) and C)

Question 14

Table 13-8
 
-Refer to Table 13-8.What is the average fixed cost of producing 5 units of output?

Accepted Answer

A)   $4
B)   $5
C)   $40
D)   $44E) C) and D)
F) All of the above

Question 15

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

Accepted Answer

A)   $25
B)   $50
C)   $100
D)   $200E) All of the above
F) B) and D)

Question 16

Cindy's Car Wash has average variable costs of $2 and average total costs of $3 when it produces 100 units of output (car washes) .The firm's total variable cost is

Accepted Answer

A)   $100.
B)   $200.
C)   $300.
D)   $500.E) All of the above
F) A) and D)

Question 17

When a firm is operating at an efficient scale,

Accepted Answer

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

Question 18

A second or third worker may have a higher marginal product than the first worker in certain circumstances.

Accepted Answer

A) True 
 B)False

Question 19

Diminishing marginal product exists when the production function becomes flatter as inputs increase.

Accepted Answer

A) True 
 B)False

Question 20

A firm produces 400 units of output at a total cost of $1,200.If total variable costs are $1,000,

Accepted Answer

A)   average fixed cost is 50 cents.
B)   average variable cost is $2.
C)   average total cost is $2.50.
D)   average total cost is 50 cents.E) C) and D)
F) B) and D)

Exam 13: The Costs of Production.

Diminishing marginal product exists when the production function becomes flatter as inputs increase.

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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 = 5,Q = 125) and (L = 6,Q = 162) .Then the marginal product of the 6th worker is

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Explicit costs

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Average variable cost is equal to total variable cost divided by quantity of output.

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

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Adam Smith describes a visit to a car factory when discussing economies of scale in his book An Inquiry into the Nature and Causes of the Wealth of Nations.

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A second or third worker may have a higher marginal product than the first worker in certain circumstances.

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Cindy's Car Wash has average variable costs of $2 and average total costs of $3 when it produces 100 units of output (car washes) .The firm's total variable cost is

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Figure 13-8 -Refer to Figure 13-8.Quantity C represents the output level where the firm

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Total cost is the

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A firm produces 400 units of output at a total cost of $1,200.If total variable costs are $1,000,

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Figure 13-7 -Refer to Figure 13-7.Which of the figures represents the total cost curve for a typical firm?

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Figure 13-3 -Refer to Figure 13-3.The graph illustrates a typical

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When a firm is operating at an efficient scale,

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Eldin is a house painter.He can paint three houses per week.He is considering hiring his friend Murphy.Murphy can paint five houses per week.What is the maximum total output possible if Eldin hires Murphy?

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Which of the following is an example of an implicit cost?

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

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Table 13-8 -Refer to Table 13-8.What is the average fixed cost of producing 5 units of output?

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

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Suppose that a worker can produce 100 units of output in 7 hours.In the 8th hour,he can produce 12 units of output.The worker can produce 112 units of output in 8 hours.

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