Question 1

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

Accepted Answer

A)   $25
B)   $50
C)   $110
D)   $220E) B) and C)
F) A) and B)

Question 2

The marginal product of labor can be defined as the change in

Accepted Answer

A)   profit divided by the change in labor.
B)   output divided by the change in labor.
C)   labor divided by the change in output.
D)   labor divided by the change in total cost.E) C) and D)
F) B) and C)

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

Suppose that a firm's long-run average total costs of producing small commuter jet airplanes increases as it produces between 2,000 and 4,000 airplanes.For this range of output,the firm is experiencing

Accepted Answer

A)   economies of scale.
B)   constant returns to scale.
C)   diseconomies of scale.
D)   specialization.E) A) and B)
F) A) and C)

Question 5

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.E) B) and C)
F) None of the above

Question 6

Accountants often ignore implicit costs.

Accepted Answer

A) True 
 B)False

Question 7

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) All of the above
F) C) and D)

Question 8

Accounting profit is greater than or equal to economic profit.

Accepted Answer

A) True 
 B)False

Question 9

Table 13-2
 
-Refer to Table 13-2.What is the average total cost of producing 525 units of output?

Accepted Answer

ATC = TC/Q...

Question 10

Trevor's Tire Company produced and sold 500 tires.The average cost of production per tire was $50.Each tire sold for a price of $65.Trevor's Tire Company's total costs are

Accepted Answer

A)   $7,500.
B)   $25,000.
C)   $32,500.
D)   $67,500.E) All of the above
F) C) and D)

Question 11

For a large firm that produces and sells automobiles,which of the following costs would be a variable cost?

Accepted Answer

A)   the $20 million payment that the firm pays each year for accounting services
B)   the cost of the steel that is used in producing automobiles
C)   the rent that the firm pays for office space in a suburb of St.Louis
D)   All of the above are correct.E) A) and B)
F) None of the above

Question 12

One assumption that distinguishes short-run cost analysis from long-run cost analysis for a profit-maximizing firm is that in the short run,

Accepted Answer

A)   output is not variable.
B)   the number of workers used to produce the firm's product is fixed.
C)   the size of the factory is fixed.
D)   there are no fixed costs.E) A) and D)
F) B) and D)

Question 13

Thirsty Thelma owns and operates a small lemonade stand.When Thelma is producing a low quantity of lemonade she has few workers and her equipment is not being fully utilized.Because she can easily put her idle resources to use,

Accepted Answer

A)   the marginal cost of an extra worker is large.
B)   the marginal cost of one more glass of lemonade is smaller than if output were high.
C)   the marginal product of an extra worker is small.
D)   her lemonade stand is likely to be crowded with workers.E) All of the above
F) B) and C)

Question 14

Describe the general shape of the average-fixed-cost curve.

Accepted Answer

AFC = FC/Q.Fixed cost is uncha...

Question 15

Table 13-12
Betty's Bakery
 
-Refer to Table 13-12.What is the variable cost of producing 8 cakes at Betty's Bakery?

Accepted Answer

A)   $120
B)   $140
C)   $155
D)   $160E) A) and C)
F) B) and C)

Question 16

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

Question 17

Table 13-3
 
-Refer to Table 13-3.The marginal product of the third worker is

Accepted Answer

A)   230 units.
B)   100 units.
C)   77 units.
D)   60 units.E) None of the above
F) B) and C)

Question 18

Wiladee used to work as an office manager,earning $25,000 per year.She gave up that job to start a tailoring business.In calculating the economic profit of her tailoring business,the $25,000 income that she gave up is counted as part of the tailoring firm's

Accepted Answer

A)   total revenue.
B)   opportunity costs.
C)   explicit costs.
D)   marginal costs.E) A) and D)
F) All of the above

Question 19

Suppose that for a particular business there are no implicit costs.Then

Accepted Answer

A)   accounting profit will be greater than economic profit.
B)   accounting profit will be the same as economic profit.
C)   accounting profit will be less than economic profit.
D)   the relationship between accounting profit and economic profit cannot be determined without more information.E) C) and D)
F) B) and C)

Question 20

When marginal cost exceeds average total cost,

Accepted Answer

A)   average fixed cost must be rising.
B)   average total cost must be rising.
C)   average total cost must be falling.
D)   marginal cost must be falling.E) None of the above
F) A) and C)

Exam 13: The Costs of Production

Economies of scale arise when

Correct Answer
verified

Accountants often ignore implicit costs.

Correct Answer
verified

Table 13-2 -Refer to Table 13-2.What is the average total cost of producing 525 units of output?

Correct Answer
verified
ATC = TC/Q...
View Answer

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

Correct Answer
verified

Suppose that for a particular business there are no implicit costs.Then

Correct Answer
verified

The marginal product of labor can be defined as the change in

Correct Answer
verified

One assumption that distinguishes short-run cost analysis from long-run cost analysis for a profit-maximizing firm is that in the short run,

Correct Answer
verified

Trevor's Tire Company produced and sold 500 tires.The average cost of production per tire was $50.Each tire sold for a price of $65.Trevor's Tire Company's total costs are

Correct Answer
verified

Describe the general shape of the average-fixed-cost curve.

Correct Answer
verified
AFC = FC/Q.Fixed cost is uncha...
View Answer

When marginal cost exceeds average total cost,

Correct Answer
verified

Suppose that a firm's long-run average total costs of producing small commuter jet airplanes increases as it produces between 2,000 and 4,000 airplanes.For this range of output,the firm is experiencing

Correct Answer
verified

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

Correct Answer
verified

Wiladee used to work as an office manager,earning $25,000 per year.She gave up that job to start a tailoring business.In calculating the economic profit of her tailoring business,the $25,000 income that she gave up is counted as part of the tailoring firm's

Correct Answer
verified

Table 13-3 -Refer to Table 13-3.The marginal product of the third worker is

Correct Answer
verified

Table 13-12 Betty's Bakery -Refer to Table 13-12.What is the variable cost of producing 8 cakes at Betty's Bakery?

Correct Answer
verified

Correct Answer
verified

Thirsty Thelma owns and operates a small lemonade stand.When Thelma is producing a low quantity of lemonade she has few workers and her equipment is not being fully utilized.Because she can easily put her idle resources to use,

Correct Answer
verified

Accounting profit is greater than or equal to economic profit.

Correct Answer
verified

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

Correct Answer
verified

For a large firm that produces and sells automobiles,which of the following costs would be a variable cost?

Correct Answer
verified

Exam 13: The Costs of Production

Economies of scale arise when

Correct AnswerverifiedShow Answer

Accountants often ignore implicit costs.

Correct AnswerverifiedShow Answer

Table 13-2 -Refer to Table 13-2.What is the average total cost of producing 525 units of output?

Correct AnswerverifiedATC = TC/Q...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Suppose that for a particular business there are no implicit costs.Then

Correct AnswerverifiedShow Answer

The marginal product of labor can be defined as the change in

Correct AnswerverifiedShow Answer

One assumption that distinguishes short-run cost analysis from long-run cost analysis for a profit-maximizing firm is that in the short run,

Correct AnswerverifiedShow Answer

Trevor's Tire Company produced and sold 500 tires.The average cost of production per tire was $50.Each tire sold for a price of $65.Trevor's Tire Company's total costs are

Correct AnswerverifiedShow Answer

Describe the general shape of the average-fixed-cost curve.

Correct AnswerverifiedAFC = FC/Q.Fixed cost is uncha...View AnswerShow Answer

When marginal cost exceeds average total cost,

Correct AnswerverifiedShow Answer

Suppose that a firm's long-run average total costs of producing small commuter jet airplanes increases as it produces between 2,000 and 4,000 airplanes.For this range of output,the firm is experiencing

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Wiladee used to work as an office manager,earning $25,000 per year.She gave up that job to start a tailoring business.In calculating the economic profit of her tailoring business,the $25,000 income that she gave up is counted as part of the tailoring firm's

Correct AnswerverifiedShow Answer

Table 13-3 -Refer to Table 13-3.The marginal product of the third worker is

Correct AnswerverifiedShow Answer

Table 13-12 Betty's Bakery -Refer to Table 13-12.What is the variable cost of producing 8 cakes at Betty's Bakery?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Thirsty Thelma owns and operates a small lemonade stand.When Thelma is producing a low quantity of lemonade she has few workers and her equipment is not being fully utilized.Because she can easily put her idle resources to use,

Correct AnswerverifiedShow Answer

Accounting profit is greater than or equal to economic profit.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

For a large firm that produces and sells automobiles,which of the following costs would be a variable cost?

Correct AnswerverifiedShow Answer

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ATC = TC/Q...
View Answer

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AFC = FC/Q.Fixed cost is uncha...
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