Question 1

Exhibit 21-5
​
 
-Refer to Exhibit 21-5. Constant returns to scale are present between

Accepted Answer

A)  points A and B.
B)  points A and C.
C)  points B and C.
D)  points B and D.
E)  points C and D.F) C) and E)
G) B) and E)

Question 2

A rise in variable input prices will affect

Accepted Answer

A)  fixed costs.
B)  variable costs.
C)  marginal costs.
D)  a, b, and c
E)  b and cF) D) and E)
G) A) and D)

Question 3

The __________ hand is the metaphor used to refer to market coordination, whereas the __________ hand is the metaphor used to refer to managerial coordination.

Accepted Answer

A)  visible; fast
B)  invisible; visible
C)  fast; lazy
D)  lazy; fast
E)  none of the aboveF) B) and D)
G) D) and E)

Question 4

The change in output that results from changing a variable input by one unit, holding all other inputs fixed, is called the marginal __________ product of the variable input.

Accepted Answer

A)  physical
B)  value
C)  average
D)  explicitE) All of the above
F) C) and D)

Question 5

Exhibit 21-9
​
 1 and ATC1 represent the initial cost curves of an aluminum can producer. In which of the following cases is it most likely that the curves will shift rightward from MC1, and ATC1 to MC3 and ATC3? A) A new tax of $0.03 per can is imposed on the producer. B) There is an increase in energy costs. C) A new supplier offers to supply aluminum to the firm at a lower price. D) a and b" class="answers-bank-image d-inline" rel="preload" >
-Refer to Exhibit 21-9. Let MC1 and ATC1 represent the initial cost curves of an aluminum can producer. In which of the following cases is it most likely that the curves will shift rightward from MC1, and ATC1 to MC3 and ATC3?

Accepted Answer

A)  A new tax of $0.03 per can is imposed on the producer.
B)  There is an increase in energy costs.
C)  A new supplier offers to supply aluminum to the firm at a lower price.
D)  a and bE) A) and C)
F) B) and C)

Question 6

Exhibit 21-4
​
 
-Refer to Exhibit 21-4. Curve A is a(n)  __________ cost curve.

Accepted Answer

A)  marginal
B)  average variable
C)  average total
D)  average fixedE) None of the above
F) A) and D)

Question 7

Exhibit 21-12
​
 
-Refer to Exhibit 21-12 above. The numbers that go in blanks (A) , (B) , (C) , and (D) , respectively, are

Accepted Answer

A)  12, 13, 14 and 12.
B)  12, 25, 39 and 51.
C)  12, 11, 10 and 9.
D)  12, 14, 13 and 11.
E)  none of the aboveF) B) and E)
G) C) and E)

Question 8

Working alone, a person who shirks receives __________ the benefits of shirking and pays __________ the costs of shirking.

Accepted Answer

A)  all; only some of
B)  only part of; all
C)  all; all
D)  only part of; only part of
E)  none of the aboveF) D) and E)
G) A) and B)

Question 9

Exhibit 21-1
 
-Refer to Exhibit 21-l. The numbers that go in blanks (C)  and (D)  are, respectively,

Accepted Answer

A)  25 and 20.
B)  20 and 22.
C)  25 and 24.
D)  22 and 20.
E)  none of the aboveF) A) and B)
G) B) and D) A

Question 10

Marginal cost is the change in

Accepted Answer

A)  total cost that results from a change in output.
B)  total revenue that results from a change in output.
C)  fixed cost that results from a change in output.
D)  a and b
E)  all of the aboveF) A) and B)
G) C) and D)

Question 11

Exhibit 21-14
  Assume that labor is the only variable input and that each additional laborer is paid $600.
-Refer to Exhibit 21-14. What is the marginal cost of producing this good with 3 and 4 laborers working [blanks (G)  and (H) ], respectively?

Accepted Answer

A)  $200; $150
B)  $60; $30
C)  $12; $40
D)  $6; $8
E)  none of the aboveF) B) and C)
G) A) and E)

Question 12

If output rises from 175 units per hour to 193 units per hour as another worker is hired and the additional worker receives $25 in wages per hour, assuming that labor is the only variable input, it follows that marginal cost is

Accepted Answer

A)  $450
B)  $4,825
C)  $4,375
D)  $45
E)  $0.45F) All of the above
G) B) and D)

Question 13

A fixed input, X, and a variable input, Y, are used to produce good A. If the marginal physical product (MPP)  of Y is constant, it follows that the

Accepted Answer

A)  marginal cost curve is upward sloping.
B)  total fixed cost curve is vertical.
C)  total variable cost curve is downward sloping.
D)  b and c
E)  none of the aboveF) B) and C)
G) A) and B)

Question 14

Exhibit 21-13
​
 
-Refer to Exhibit 21-13. What dollar amounts go in blanks (P)  and (Q) , respectively?

Accepted Answer

A)  $120; $125
B)  $10; 95
C)  $30; $80
D)  $93.33; $82.50
E)  There is not enough information to answer this question.F) A) and E)
G) B) and D) D

Question 15

Exhibit 21-13
​
 
-Refer to Exhibit 21-13. What dollar amounts go in blanks (E)  and (F) , respectively?

Accepted Answer

A)  $200; $30
B)  $40; $80
C)  $200; $15
D)  $3; $40
E)  There is not enough information to answer this question.F) A) and E)
G) A) and C)

Question 16

Which of the following statements is false?

Accepted Answer

A)  If the MC curve is rising, the AVC curve must be rising.
B)  If MC is below ATC, ATC must be falling.
C)  If MC is above AVC, then AVC must be rising.
D)  If MC is above ATC, then ATC must be rising.E) A) and D)
F) B) and D) A

Question 17

Cy recently went into the business of producing and selling cardboard boxes. For this business, which of the following is most likely to be a fixed cost?

Accepted Answer

A)  fire insurance
B)  labor costs
C)  paper costs
D)  adhesive costs
E)  b, c, and d are equally likely to be fixed costsF) None of the above
G) A) and D)

Question 18

One of the roles of the monitor in a firm is to reduce shirking.

Accepted Answer

A) True 
 B)False

Question 19

If AFC is $8 at a quantity of output of 1,000 units, and ATC is $12 at the same level of output, it follows that

Accepted Answer

A)  marginal cost is $10.
B)  AVC is $4,000.
C)  total cost is $4,000.
D)  marginal cost is $1,000.
E)  AVC is $4.F) A) and B)
G) A) and C)

Question 20

Economic profit is

Accepted Answer

A)  total revenue minus total cost (including both explicit and implicit costs) .
B)  the same as accounting profit.
C)  accounting profit plus implicit costs.
D)  accounting profit minus implicit costs.
E)  a and dF) B) and E)
G) A) and E)

Exam 21: Production and Costs

Exhibit 21-5 ​ -Refer to Exhibit 21-5. Constant returns to scale are present between

Correct AnswerverifiedShow Answer

A rise in variable input prices will affect

Correct AnswerverifiedShow Answer

The __________ hand is the metaphor used to refer to market coordination, whereas the __________ hand is the metaphor used to refer to managerial coordination.

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The change in output that results from changing a variable input by one unit, holding all other inputs fixed, is called the marginal __________ product of the variable input.

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Exhibit 21-9 ​ -Refer to Exhibit 21-9. Let MC1 and ATC1 represent the initial cost curves of an aluminum can producer. In which of the following cases is it most likely that the curves will shift rightward from MC1, and ATC1 to MC3 and ATC3?

Correct AnswerverifiedShow Answer

Exhibit 21-4 ​ -Refer to Exhibit 21-4. Curve A is a(n) __________ cost curve.

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Exhibit 21-12 ​ -Refer to Exhibit 21-12 above. The numbers that go in blanks (A) , (B) , (C) , and (D) , respectively, are

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Working alone, a person who shirks receives __________ the benefits of shirking and pays __________ the costs of shirking.

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Exhibit 21-1 -Refer to Exhibit 21-l. The numbers that go in blanks (C) and (D) are, respectively,

Correct AnswerverifiedA

Marginal cost is the change in

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Exhibit 21-14 Assume that labor is the only variable input and that each additional laborer is paid $600. -Refer to Exhibit 21-14. What is the marginal cost of producing this good with 3 and 4 laborers working [blanks (G) and (H) ], respectively?

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If output rises from 175 units per hour to 193 units per hour as another worker is hired and the additional worker receives $25 in wages per hour, assuming that labor is the only variable input, it follows that marginal cost is

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A fixed input, X, and a variable input, Y, are used to produce good A. If the marginal physical product (MPP) of Y is constant, it follows that the

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Exhibit 21-13 ​ -Refer to Exhibit 21-13. What dollar amounts go in blanks (P) and (Q) , respectively?

Correct AnswerverifiedD

Exhibit 21-13 ​ -Refer to Exhibit 21-13. What dollar amounts go in blanks (E) and (F) , respectively?

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Which of the following statements is false?

Correct AnswerverifiedA

Cy recently went into the business of producing and selling cardboard boxes. For this business, which of the following is most likely to be a fixed cost?

Correct AnswerverifiedShow Answer

One of the roles of the monitor in a firm is to reduce shirking.

Correct AnswerverifiedShow Answer

If AFC is $8 at a quantity of output of 1,000 units, and ATC is $12 at the same level of output, it follows that

Correct AnswerverifiedShow Answer

Economic profit is

Correct AnswerverifiedShow Answer

Exhibit 21-5 -Refer to Exhibit 21-5. Constant returns to scale are present between

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The hand is the metaphor used to refer to market coordination, whereas the hand is the metaphor used to refer to managerial coordination.

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Exhibit 21-9 -Refer to Exhibit 21-9. Let MC₁ and ATC₁ represent the initial cost curves of an aluminum can producer. In which of the following cases is it most likely that the curves will shift rightward from MC₁, and ATC₁ to MC₃ and ATC₃?

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Exhibit 21-4 -Refer to Exhibit 21-4. Curve A is a(n) __________ cost curve.

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Exhibit 21-12 -Refer to Exhibit 21-12 above. The numbers that go in blanks (A) , (B) , (C) , and (D) , respectively, are

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Working alone, a person who shirks receives the benefits of shirking and pays the costs of shirking.

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A

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Exhibit 21-13 -Refer to Exhibit 21-13. What dollar amounts go in blanks (P) and (Q) , respectively?

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D

Exhibit 21-13 -Refer to Exhibit 21-13. What dollar amounts go in blanks (E) and (F) , respectively?

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A

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