Question 1

Scenario 13-5
Suppose that Emily opens a restaurant. She receives a loan from a bank for $200,000. She withdraws $100,000 from her personal savings account. The interest rate on the loan is 6%, and the interest rate on her savings account is 2%.
-Refer to Scenario 13-5. Emily's total opportunity cost of capital is

Accepted Answer

A)  $2,000.
B)  $4,000.
C)  $12,000.
D)  $14,000.

Question 2

Randy is a minor-league baseball player. His current cumulative batting average is 0.270. Randy believes that if he can raise his cumulative batting average to 0.300, he will have a chance to play in the major leagues. Which of the following statements is correct?

Accepted Answer

A)  If Randy gets between 27 and 30 hits out of his next 100 at bats, he will be able to raise his cumulative batting average to 0.300.
B)  If Randy gets 30 hits out of his next 100 at bats, he will be able to raise his cumulative batting average to 0.300.
C)  Randy must get more than 30 hits out of his next 100 at bats in order to raise his cumulative batting average to 0.300.
D)  Either b or c could be correct.

Question 3

Table 13-18 
-Refer to Table 13-18. What is the average variable cost of producing 500 units of output?

Accepted Answer

AVC = VC/Q...

Question 4

Figure 13-9
The figure below depicts average total cost functions for a firm that produces automobiles. 
-Refer to Figure 13-9. The firm experiences economies of scale at which output levels?

Accepted Answer

A)  output levels less than M
B)  output levels between M and N
C)  output levels greater than N
D)  All of the above are correct as long as the firm is operating in the long run.

Question 5

When marginal cost is less than average total cost,

Accepted Answer

A)  marginal cost must be falling.
B)  average variable cost must be falling.
C)  average total cost is falling.
D)  average total cost is rising.

Question 6

Scenario 13-19
Doreen's Dairy produces and sells Swiss cheese. Last year, it produced 7,000 pounds and sold each pound for $6. In producing the 7,000 pounds, the dairy incurred variable costs of $28,000 and a total cost of $40,000.
-Refer to Scenario 13-19. Suppose the owner of the business had an offer to work for another firm for $25,000. The firm's accounting profit for the year was

Accepted Answer

A)  -$26,000.
B)  -$23,000.
C)  $2,000.
D)  $14,000.

Question 7

When economists speak of a firm's costs, they are usually excluding the opportunity costs.

Accepted Answer

A) True 
 B)False

Question 8

Figure 1
b.
Figure 2
c.
Figure 3
d.
Figure 4
ANSWER:
d
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
ECON.MANK.174 - Given a graph of the production function and input costs, derive the firm's total-cost curve.
TOPICS:
Producer theory
Production function
KEYWORDS:
BLOOM'S: Comprehension
CUSTOM ID:
178.13.3 - MC - MANK08
Figure 13-8 
-Refer to Figure 13-8. Which of the following statements is correct?

Accepted Answer

A)  Marginal cost is rising for quantities higher than D because marginal cost is higher than average total cost.
B)  Average variable cost is declining for quantities less than B because marginal cost is lower than average variable cost.
C)  Marginal cost is minimized at B because at that quantity, marginal cost equals average variable cost.
D)  All of the above are correct.

Question 9

When a firm is making a profit-maximizing production decision, which of the following principles of economics is likely to be most important to the firm's decision?

Accepted Answer

A)  The cost of something is what you give up to get it.
B)  A country's standard of living depends on its ability to produce goods and services.
C)  Prices rise when the government prints too much money.
D)  Governments can sometimes improve market outcomes.

Question 10

Economies of scale arise when

Accepted Answer

A)  an economy is self-sufficient in production.
B)  individuals in a society are self-sufficient.
C)  fixed costs are large relative to variable costs.
D)  workers are able to specialize in a particular task.

Question 11

When a firm's long-run average total costs do not vary as output increases, the firm exhibits

Accepted Answer

A)  economies of scale.
B)  constant returns to scale.
C)  diseconomies of scale.
D)  an efficient use of resources.

Question 12

Table 13-18 
-Refer to Table 13-18. What is the shape of the marginal-cost curve?

Accepted Answer

MC = change in TC / change in Q, so alth...

Question 13

A key difference between accountants and economists is their different treatment of the cost of capital. Does this cause an accountant's estimate of total costs to be higher or lower than an economist's estimate? Explain.

Accepted Answer

An accountant would not include the forg...

Question 14

Scenario 13-13
Christine is an artist who creates custom cookie jars. Her annual revenue from selling the cookie jars is $90,000. The annual explicit costs of the materials used to make the cookie jars are $54,000.
-Refer to Scenario 13-13. Christine could earn $6,000 per year preparing taxes. In calculating the economic profit of her cookie jar business, the $6,000 that Christine gives up is counted as part of her business's

Accepted Answer

A)  total revenue.
B)  explicit costs.
C)  implicit costs.
D)  marginal costs.

Question 15

​Sebastian decides to open a tree farm. When deciding to open his own business, he turned down two separate job offers of $25,000 and $30,000 and withdrew $20,000 from his savings. Sebastian's savings account paid 3 percent interest. He also borrowed $20,000 from his brother, whom he pays 2 percent interest per year. He spent $15,000 to purchase supplies and earned $50,000 in revenue during his first year. Which of the following statements is correct?

Accepted Answer

A)  ​Sebastian's economic profit is $4,000, and his accounting profit is $34,600.
B)  ​Sebastian's economic profit is $4,600, and his accounting profit is $35,000.
C)  ​Sebastian's economic profit is -$16,000, and his accounting profit is $34,600.
D)  ​Sebastian's economic profit is -$16,000, and his accounting profit is $14,600.

Question 16

The U-shaped average-total-cost curve reflects the U-shaped average-fixed-cost curve.

Accepted Answer

A) True 
 B)False

Question 17

Bubba is a shrimp fisherman who used $2,000 from his personal savings account to buy a boat and equipment for his shrimp business. The savings account paid 2% interest. What is Bubba's annual opportunity cost of the financial capital that he invested in his business?

Accepted Answer

A)  $20
B)  $40
C)  $200
D)  $400

Question 18

Table 13-2 
-Refer to Table 13-2. At which number of workers does diminishing marginal product begin?

Accepted Answer

A)  1
B)  2
C)  3
D)  4

Question 19

Which of the following statements is correct?

Accepted Answer

A)  Opportunity costs equal explicit minus implicit costs.
B)  Economists consider opportunity costs to be included in a firm's total revenues.
C)  Economists consider opportunity costs to be included in a firm's costs of production.
D)  All of the above are correct.

Question 20

Marginal cost increases as the quantity of output increases. This reflects the property of

Accepted Answer

A)  increasing total cost.
B)  diminishing total cost.
C)  increasing marginal product.
D)  diminishing marginal product.

Exam 13: The Costs of Production

Correct Answer
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Correct Answer
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When economists speak of a firm's costs, they are usually excluding the opportunity costs.

Correct Answer
verified

Marginal cost increases as the quantity of output increases. This reflects the property of

Correct Answer
verified

Correct Answer
verified

Table 13-18 -Refer to Table 13-18. What is the average variable cost of producing 500 units of output?

Correct Answer
verified
AVC = VC/Q...
View Answer

When a firm's long-run average total costs do not vary as output increases, the firm exhibits

Correct Answer
verified

Economies of scale arise when

Correct Answer
verified

A key difference between accountants and economists is their different treatment of the cost of capital. Does this cause an accountant's estimate of total costs to be higher or lower than an economist's estimate? Explain.

Correct Answer
verified
An accountant would not include the forg...
View Answer

Table 13-2 -Refer to Table 13-2. At which number of workers does diminishing marginal product begin?

Correct Answer
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Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. The firm experiences economies of scale at which output levels?

Correct Answer
verified

Randy is a minor-league baseball player. His current cumulative batting average is 0.270. Randy believes that if he can raise his cumulative batting average to 0.300, he will have a chance to play in the major leagues. Which of the following statements is correct?

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

The U-shaped average-total-cost curve reflects the U-shaped average-fixed-cost curve.

Correct Answer
verified

Bubba is a shrimp fisherman who used $2,000 from his personal savings account to buy a boat and equipment for his shrimp business. The savings account paid 2% interest. What is Bubba's annual opportunity cost of the financial capital that he invested in his business?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

When a firm is making a profit-maximizing production decision, which of the following principles of economics is likely to be most important to the firm's decision?

Correct Answer
verified

When marginal cost is less than average total cost,

Correct Answer
verified

Table 13-18 -Refer to Table 13-18. What is the shape of the marginal-cost curve?

Correct Answer
verified
MC = change in TC / change in Q, so alth...
View Answer

Exam 13: The Costs of Production

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When economists speak of a firm's costs, they are usually excluding the opportunity costs.

Correct AnswerverifiedShow Answer

Marginal cost increases as the quantity of output increases. This reflects the property of

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 13-18 -Refer to Table 13-18. What is the average variable cost of producing 500 units of output?

Correct AnswerverifiedAVC = VC/Q...View AnswerShow Answer

When a firm's long-run average total costs do not vary as output increases, the firm exhibits

Correct AnswerverifiedShow Answer

Economies of scale arise when

Correct AnswerverifiedShow Answer

A key difference between accountants and economists is their different treatment of the cost of capital. Does this cause an accountant's estimate of total costs to be higher or lower than an economist's estimate? Explain.

Correct AnswerverifiedAn accountant would not include the forg...View AnswerShow Answer

Table 13-2 -Refer to Table 13-2. At which number of workers does diminishing marginal product begin?

Correct AnswerverifiedShow Answer

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. The firm experiences economies of scale at which output levels?

Correct AnswerverifiedShow Answer

Randy is a minor-league baseball player. His current cumulative batting average is 0.270. Randy believes that if he can raise his cumulative batting average to 0.300, he will have a chance to play in the major leagues. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

The U-shaped average-total-cost curve reflects the U-shaped average-fixed-cost curve.

Correct AnswerverifiedShow Answer

Bubba is a shrimp fisherman who used $2,000 from his personal savings account to buy a boat and equipment for his shrimp business. The savings account paid 2% interest. What is Bubba's annual opportunity cost of the financial capital that he invested in his business?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When a firm is making a profit-maximizing production decision, which of the following principles of economics is likely to be most important to the firm's decision?

Correct AnswerverifiedShow Answer

When marginal cost is less than average total cost,

Correct AnswerverifiedShow Answer

Table 13-18 -Refer to Table 13-18. What is the shape of the marginal-cost curve?

Correct AnswerverifiedMC = change in TC / change in Q, so alth...View AnswerShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
AVC = VC/Q...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
An accountant would not include the forg...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified
MC = change in TC / change in Q, so alth...
View Answer