Question 1

Scenario 13-11
Zach withdrew $400,000 out of his personal savings account and used it to start his new cookie business. The bank account pays 3 percent interest per year. During the first year of his business, Zach sold 6,000 boxes of cookies for $2.50 per box. Also during the first year, the cookie business made monetary outlays of $9,000. You may assume that there is no opportunity cost to Zach's time.
-Refer to Scenario 13-11.Zach's accounting profit for the year was

Accepted Answer

A)   $-494,000.
B)   $-6,000.
C)   $6,000.
D)   $12,000.E) None of the above
F) All of the above

Question 2

Several related measures of cost can be derived from a firm's total cost.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A)   $25
B)   $50
C)   $100
D)   $150E) A) and B)
F) C) and D)

Question 4

Table 13-4
Charles's Math Tutoring
 
-Refer to Table 13-4.Charles's math tutoring company experiences diminishing marginal productivity with the addition of the

Accepted Answer

A)   first worker.
B)   second worker.
C)   third worker.
D)   fourth worker.E) B) and C)
F) C) and D)

Question 5

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.Suppose the owner of the business had an offer to work for another firm for $25,000.The firm's economic profit for the year was

Accepted Answer

A)   $-28,000.
B)   $-25,000
C)   $-3,000.
D)   $17,000.E) B) and D)
F) A) and D)

Question 6

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 marginal cost of the third worker hired is $40,and the average total cost when three workers are hired is $50.What is the total cost of production when three workers are hired?

Accepted Answer

A)   $50
B)   $90
C)   $120
D)   $150E) B) and C)
F) A) and D)

Question 7

The Big Box corporation produced and sold 500 units of output.The average cost of production per unit was $50.Each unit sold for a price of $65.The Big Box corporation's total revenues are

Accepted Answer

A)   $7,500.
B)   $25,000.
C)   $32,500.
D)   $67,500.E) None of the above
F) All of the above

Question 8

At low levels of production,the firm

Accepted Answer

A)   benefits from increased size because it can take advantage of greater specialization.
B)   has the potential for economies of scale.
C)   is unlikely to experiences acute problems with coordination.
D)   All of the above are correct.E) A) and B)
F) B) and D)

Question 9

If a firm produces nothing,it still incurs its fixed costs.

Accepted Answer

A) True 
 B)False

Question 10

In the long run Firm A incurs total costs of $900 when output is 30 units and $1,200 when output is 40 units.Firm A exhibits

Accepted Answer

A)   diseconomies of scale because total cost is rising as output rises.
B)   constant returns to scale because average total cost is constant as output rises.
C)   diseconomies of scale because average total cost is rising as output rises.
D)   economies of scale because average total cost is falling as output rises.E) A) and B)
F) All of the above

Question 11

Harry's Hotdogs is a small street vendor business owned by Harry Huggins.Harry is trying to get a better understanding of his costs by categorizing them as fixed or variable.Which of the following costs are most likely to be considered fixed costs?

Accepted Answer

A)   the cost of mustard
B)   the cost of hotdog buns
C)   wages paid to workers who sell hot dogs
D)   the cost of bookkeeping servicesE) A) and D)
F) B) and C)

Question 12

The field of industrial organization addresses how the number of firms affects prices in a market and the efficiency of the market outcome.

Accepted Answer

A) True 
 B)False

Question 13

Figure 13-5
 
-Refer to Figure 13-5.Which curve is most likely to represent marginal cost?

Accepted Answer

A)   A
B)   B
C)   C
D)   DE) A) and C)
F) B) and D)

Question 14

Scenario 13-10
Walter builds birdhouses. He spends $5 on the materials for each birdhouse. He can build one in 30 minutes. He is semi-retired but earns $8 per hour at the local hardware store. He can sell a birdhouse for $20 each.
-Refer to Scenario 13-10.The implicit cost for one birdhouse is

Accepted Answer

A)   $4.
B)   $5.
C)   $8.
D)   $9.E) A) and B)
F) C) and D)

Question 15

Scenario 13-15
Farmer Jack is a watermelon farmer. If Jack plants no seeds on his farm, he gets no harvest. If he plants 1 bag of seeds, he gets 30 watermelons. If he plants 2 bags of seeds, he gets 50 watermelons. If he plants 3 bags of seeds he gets 60 watermelons. A bag of seeds costs $100, and the costs of seeds are his only costs.
-Refer to Scenario 13-15.Farmer Jack's marginal cost
(i) curve is U-shaped.
(ii) decreases with increased watermelon output.
(iii) reflects diminishing marginal product.

Accepted Answer

A)   (ii)  only
B)   (iii)  only
C)   (i)  and (iii)  only
D)   (i)  and (ii)  onlyE) A) and B)
F) A) and C)

Question 16

The fundamental reason that marginal cost eventually rises as output increases is because of

Accepted Answer

A)   economies of scale.
B)   diseconomies of scale.
C)   diminishing marginal product.
D)   rising average fixed cost.E) A) and D)
F) All of the above

Question 17

Figure 13-3
 
-Refer to Figure 13-3.The graph illustrates a typical total cost curve.Based on its shape,what does the corresponding production function look like?

Accepted Answer

A)   an upward-sloping curve that increases at an increasing rate
B)   an upward-sloping curve that increases at a decreasing rate
C)   a downward-sloping curve
D)   a horizontal straight lineE) A) and C)
F) All of the above

Question 18

Scenario 13-6
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 13-6.An economist would calculate Tony's total cost to equal

Accepted Answer

A)   $130.
B)   $250.
C)   $300.
D)   $380.E) All of the above
F) B) and C)

Question 19

Scenario 13-10
Walter builds birdhouses. He spends $5 on the materials for each birdhouse. He can build one in 30 minutes. He is semi-retired but earns $8 per hour at the local hardware store. He can sell a birdhouse for $20 each.
-Refer to Scenario 13-10.An accountant would calculate the total profit for one birdhouse to be

Accepted Answer

A)   $7.
B)   $11.
C)   $12.
D)   $15.E) A) and C)
F) B) and C)

Question 20

Table 13-9
 
-Refer to Table 13-9.What is the variable cost of producing 0 posters?

Accepted Answer

A)   $0.00
B)   $1.00
C)   $10.00
D)   $10.000E) None of the above
F) A) and B)

Exam 13: The Costs of Production.

The fundamental reason that marginal cost eventually rises as output increases is because of

Correct Answer
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Harry's Hotdogs is a small street vendor business owned by Harry Huggins.Harry is trying to get a better understanding of his costs by categorizing them as fixed or variable.Which of the following costs are most likely to be considered fixed costs?

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Figure 13-5 -Refer to Figure 13-5.Which curve is most likely to represent marginal cost?

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Several related measures of cost can be derived from a firm's total cost.

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At low levels of production,the firm

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Scenario 13-10 Walter builds birdhouses. He spends $5 on the materials for each birdhouse. He can build one in 30 minutes. He is semi-retired but earns $8 per hour at the local hardware store. He can sell a birdhouse for $20 each. -Refer to Scenario 13-10.The implicit cost for one birdhouse is

Correct Answer
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Table 13-4 Charles's Math Tutoring -Refer to Table 13-4.Charles's math tutoring company experiences diminishing marginal productivity with the addition of the

Correct Answer
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In the long run Firm A incurs total costs of $900 when output is 30 units and $1,200 when output is 40 units.Firm A exhibits

Correct Answer
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The Big Box corporation produced and sold 500 units of output.The average cost of production per unit was $50.Each unit sold for a price of $65.The Big Box corporation's total revenues are

Correct Answer
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If a firm produces nothing,it still incurs its fixed costs.

Correct Answer
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Figure 13-3 -Refer to Figure 13-3.The graph illustrates a typical total cost curve.Based on its shape,what does the corresponding production function look like?

Correct Answer
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The field of industrial organization addresses how the number of firms affects prices in a market and the efficiency of the market outcome.

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

Correct Answer
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Table 13-9 -Refer to Table 13-9.What is the variable cost of producing 0 posters?

Correct Answer
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Exam 13: The Costs of Production.

The fundamental reason that marginal cost eventually rises as output increases is because of

Correct AnswerverifiedShow Answer

Harry's Hotdogs is a small street vendor business owned by Harry Huggins.Harry is trying to get a better understanding of his costs by categorizing them as fixed or variable.Which of the following costs are most likely to be considered fixed costs?

Correct AnswerverifiedShow Answer

Figure 13-5 -Refer to Figure 13-5.Which curve is most likely to represent marginal cost?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Several related measures of cost can be derived from a firm's total cost.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

At low levels of production,the firm

Correct AnswerverifiedShow Answer

Scenario 13-10 Walter builds birdhouses. He spends $5 on the materials for each birdhouse. He can build one in 30 minutes. He is semi-retired but earns $8 per hour at the local hardware store. He can sell a birdhouse for $20 each. -Refer to Scenario 13-10.The implicit cost for one birdhouse is

Correct AnswerverifiedShow Answer

Table 13-4 Charles's Math Tutoring -Refer to Table 13-4.Charles's math tutoring company experiences diminishing marginal productivity with the addition of the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In the long run Firm A incurs total costs of $900 when output is 30 units and $1,200 when output is 40 units.Firm A exhibits

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The Big Box corporation produced and sold 500 units of output.The average cost of production per unit was $50.Each unit sold for a price of $65.The Big Box corporation's total revenues are

Correct AnswerverifiedShow Answer

If a firm produces nothing,it still incurs its fixed costs.

Correct AnswerverifiedShow Answer

Figure 13-3 -Refer to Figure 13-3.The graph illustrates a typical total cost curve.Based on its shape,what does the corresponding production function look like?

Correct AnswerverifiedShow Answer

The field of industrial organization addresses how the number of firms affects prices in a market and the efficiency of the market outcome.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 13-9 -Refer to Table 13-9.What is the variable cost of producing 0 posters?

Correct AnswerverifiedShow Answer

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