question
According to the textbook, economists normally assume that the goal of a typical business (firm) is to
(x) sell as much of their product as possible regardless of the level of profit.
(y) set the price of their product as high as possible regardless of the level of profit.
(z) maximize profit regardless of the price or quantity of sales.
(x) sell as much of their product as possible regardless of the level of profit.
(y) set the price of their product as high as possible regardless of the level of profit.
(z) maximize profit regardless of the price or quantity of sales.
answer
(z) only
question
The amount of money that a firm receives from the sale of its output is called
answer
Total Revenue
question
Which of the following statements about profit is (are) correct?
(x) Profit is defined as total revenue minus total cost.
(y) Accounting profit is equal to total revenue minus the implicit cost of producing a good.
(z) In order to compute economic profit, the economist must include both explicit and implicit costs in the calculation of total costs.
(x) Profit is defined as total revenue minus total cost.
(y) Accounting profit is equal to total revenue minus the implicit cost of producing a good.
(z) In order to compute economic profit, the economist must include both explicit and implicit costs in the calculation of total costs.
answer
(x) and (z) only
question
Which of the following statements is (are) correct?
(x) Although implicit costs are important costs for a firm, they do not require an outlay of money by the firm.
(y) The lost opportunity to invest in other capital markets when the money is invested in one's business is an important implicit cost of almost every business.
(z) A business owner forgoing an opportunity to earn a large salary working for a Wall Street brokerage firm is an implicit cost
(x) Although implicit costs are important costs for a firm, they do not require an outlay of money by the firm.
(y) The lost opportunity to invest in other capital markets when the money is invested in one's business is an important implicit cost of almost every business.
(z) A business owner forgoing an opportunity to earn a large salary working for a Wall Street brokerage firm is an implicit cost
answer
(x), (y), and (z)
question
A sports equipment firm manufactures and sells basketballs. Last year it sold 12,000 basketballs at a price of $40 per basketball. For last year, the firm's
answer
total revenue was $480,000
question
Toledo Tire Company produced and sold 6,000 tires. The average cost of production per tire was $70. Each tire sold for a price of $85. Toledo Tire Company's total costs are
answer
$420,000
question
Thompson Table Company produced and sold 5,000 tables. The average cost of production per table was $150. Each tire sold for a price of $180. Thompson Table Company's total profits are
answer
$150,000
question
Beatrice owns a cabinet installation business. Her accountant most likely includes which of the following costs on her financial statements?
answer
the labor cost of Beatrice's assistant cabinet installer
question
A firm produces and sells potato chips. Last year it sold 3 million bags of potato chips at a price of $3 per bag. Total costs of production equal $5.5 million. If implicit costs are not equal to zero, then, for last year, the firm's
(x) total revenue was $9 million.
(y) economic profit was $3.5 million.
(z) accounting profit was more than $3.5 million
(x) total revenue was $9 million.
(y) economic profit was $3.5 million.
(z) accounting profit was more than $3.5 million
answer
(x), (y) and (z)
question
William decides to open his own business and earns $70,000 in accounting profit the first year. When deciding to open his own business, he turned down three separate job offers with annual salaries of $48,000, $52,000, and $55,000. What is William's economic profit from running his own business?
answer
$15,000
question
Sylvia has decided to start her own photography studio. To purchase the necessary equipment, Sylvia withdrew $10,000 from her savings account, which was earning 3% interest, and borrowed an additional $5,000 from the bank at an interest rate of 8%. Sylvia's annual opportunity cost of the financial capital that has been invested in the business is _________, of which _________ is implicit cost?
answer
$700: $300
question
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?
answer
The cost of something is what you give up to get it.
question
Crazy Stuff, Inc. produced 10,000 units of output but sold only 9,000 of the units produced. The average cost of production for each unit of output produced was $75. Each of the 9,000 units sold were sold for a price of $85.
(x) Total costs of production for Crazy Stuff, Inc. would be less than $760,000 but more than $670,000.
(y) Total revenue for Crazy Stuff, Inc. would be $765,000.
(z) Economic profits for Crazy Stuff, Inc. would equal $100,000
(x) Total costs of production for Crazy Stuff, Inc. would be less than $760,000 but more than $670,000.
(y) Total revenue for Crazy Stuff, Inc. would be $765,000.
(z) Economic profits for Crazy Stuff, Inc. would equal $100,000
answer
(x) and (y) only
question
Which of these assumptions is often realistic in the long run? A firm can vary
answer
both the size of its factory and the number of workers it employs
question
Which of the following statements is (are) correct?
(x) A production function is a relationship between inputs and quantity of output.
(y) Marginal product of labor is calculated as the increase in output due to the addition of one unit of labor.
(z) Marginal product of labor can be defined as the change in output divided by the change in labor.
(x) A production function is a relationship between inputs and quantity of output.
(y) Marginal product of labor is calculated as the increase in output due to the addition of one unit of labor.
(z) Marginal product of labor can be defined as the change in output divided by the change in labor.
answer
(x), (y) and (z)
question
Which of the following statements is (are) correct?
(x) Economists distinguish between short run and long run production by assuming that in the short run, at least one input is fixed and in the long run all inputs are variable.
(y) In the long run, fixed inputs change to variable inputs so the size of a factory is not fixed in the long run.
(z) One would expect to observe diminishing marginal product when the labor force must use a smaller amount of inputs to produce more of the product.
(x) Economists distinguish between short run and long run production by assuming that in the short run, at least one input is fixed and in the long run all inputs are variable.
(y) In the long run, fixed inputs change to variable inputs so the size of a factory is not fixed in the long run.
(z) One would expect to observe diminishing marginal product when the labor force must use a smaller amount of inputs to produce more of the product.
answer
(x) and (y) only
question
Charlene, a chemist, worked in a chemistry lab and earned $60,000 per year. Charlene quit in order to start her own business. To buy the necessary equipment, she withdrew $50,000 from her savings, (which paid two percent interest per year) and borrowed $60,000 from her Aunt Bea, whom she pays five percent interest per year. Last year she paid $48,000 for ingredients and paid all of the interest on the loan from her aunt. She had revenue of $124,000. For last year, Alvin, the accountant, says Charlene's profit is ________ and Emily the economist, says Charlene's profit is ________.
answer
$73,000; $12,000
question
According to the textbook, which of the following statements is (are) correct?
(x) In the short run, if a firm produces nothing, then, by definition, fixed costs will equal zero.
(y) Fixed costs can be defined as costs that are incurred even if nothing is produced.
(z) Although fixed costs do not vary as a firm varies the output amount that it produces, average fixed costs for the firm do vary as the amount of output varies.
(x) In the short run, if a firm produces nothing, then, by definition, fixed costs will equal zero.
(y) Fixed costs can be defined as costs that are incurred even if nothing is produced.
(z) Although fixed costs do not vary as a firm varies the output amount that it produces, average fixed costs for the firm do vary as the amount of output varies.
answer
(y) and (z) only
question
For a firm that produces wooden tables, which of the following costs is a fixed cost in the short run?
(x) the rent that the firm pays for the space that is used to produce the wooden tables.
(y) the cost of the wood that is used in the production of the wooden tables.
(z) the monthly rent that the firm pays for equipment that is used to produce the wooden tables
(x) the rent that the firm pays for the space that is used to produce the wooden tables.
(y) the cost of the wood that is used in the production of the wooden tables.
(z) the monthly rent that the firm pays for equipment that is used to produce the wooden tables
answer
(x) and (z) only
question
For a construction company that builds houses, which of the following costs would be a fixed cost?
(x) the $30,000 per year salary paid to the company's bookkeeper.
(y) property taxes on the land that is used as storage for all of the firm's supplies.
(z) the $20 per hour wage paid to a construction supervisor
(x) the $30,000 per year salary paid to the company's bookkeeper.
(y) property taxes on the land that is used as storage for all of the firm's supplies.
(z) the $20 per hour wage paid to a construction supervisor
answer
(x) and (y) only
question
For a firm that produces and sells boats, which of the following costs is a variable cost in the short run?
(x) the rent that the firm pays for office space to house the executive and sales staff.
(y) the cost of the wood, fiberglass and steel that is used in the production of the boats.
(z) the payroll that is paid to the production laborers that work on the assembly line.
(x) the rent that the firm pays for office space to house the executive and sales staff.
(y) the cost of the wood, fiberglass and steel that is used in the production of the boats.
(z) the payroll that is paid to the production laborers that work on the assembly line.
answer
(y) and (z) only
question
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 when the firm hires 2 workers, the total cost of production is $2,000. When the firm hires a total of 3 workers, the total cost of production is $2,500. In addition, assume that the variable cost per unit of labor is the same regardless of the number of units of labor that are hired. What is the firm's fixed cost?
answer
$1,000
question
Connie's Car Wash has average variable costs of $3 and average fixed costs of $4 when it produces 800 units of output (car washes). If the firm produces 800 units, then the firm's total cost is
answer
$5,600
question
Which of the following expressions is (are) correct?
(x) marginal cost = (change in quantity of output) divided by (change in total cost)
(y) average total cost = total cost divided by quantity of output
(z) average total cost = average fixed cost + average variable cost
(x) marginal cost = (change in quantity of output) divided by (change in total cost)
(y) average total cost = total cost divided by quantity of output
(z) average total cost = average fixed cost + average variable cost
answer
(y) and (z) only
question
According to the textbook, which of the following statements is (are) correct?
(x) Average variable cost equals variable costs divided by quantity produced.
(y) Marginal cost equals the change in variable costs divided by the change in quantity produced.
(z) If you find the difference between average total cost and average variable cost and then multiply that value by the specified quantity then the resulting value is the amount of fixed costs.
(x) Average variable cost equals variable costs divided by quantity produced.
(y) Marginal cost equals the change in variable costs divided by the change in quantity produced.
(z) If you find the difference between average total cost and average variable cost and then multiply that value by the specified quantity then the resulting value is the amount of fixed costs.
answer
(x), (y) and (z)
question
At Annie's Apple Pies, the total cost of producing 800 apple pies is $6,400. The variable cost of producing 800 apple pies is equal to $4,800. At Annie's Apple Pies, the average fixed cost of the 800th apple pie is
answer
$2.00
question
According to the textbook, which of the following statements is (are) correct?
(x) The marginal cost of the fifth unit equals the variable cost of five units minus the variable cost of four units.
(y) The variable cost of 50 units equals the average variable cost of 50 units times 50.
(z) If marginal cost is rising, then average variable cost is rising if marginal cost exceeds average variable cost.
(x) The marginal cost of the fifth unit equals the variable cost of five units minus the variable cost of four units.
(y) The variable cost of 50 units equals the average variable cost of 50 units times 50.
(z) If marginal cost is rising, then average variable cost is rising if marginal cost exceeds average variable cost.
answer
(x), (y) and (z)
question
At Big Bert's Basketballers, the total cost of producing 100 premium grade basketballs is $4,800. The marginal cost of producing an additional ten basketballs is $590. The average total cost of 110 basketballs
answer
is $49.
question
At Samantha's Soccer House, the total cost of producing 200 premium grade soccer balls is $10,800. Fixed costs are equal to $3,200 and the variable cost of producing 210 soccer balls is $8,190. The marginal cost of the 205th soccer ball is
answer
$59
question
Which of the following statements is (are) correct about the short-run?
(x) Marginal cost falls when marginal product is falling.
(y) A firm is necessarily experiencing diminishing marginal product if the marginal cost curve slopes upward.
(z) If the marginal cost curve is U-shaped it is because of the presence of increasing marginal product followed by diminish marginal product.
(x) Marginal cost falls when marginal product is falling.
(y) A firm is necessarily experiencing diminishing marginal product if the marginal cost curve slopes upward.
(z) If the marginal cost curve is U-shaped it is because of the presence of increasing marginal product followed by diminish marginal product.
answer
(y) and (z) only
question
Average total cost is increasing whenever (x) total cost is increasing. (y) marginal cost exceeds average total cost (z) marginal cost is increasing.
answer
(y) only
question
Which of the following statements is (are) correct?
(x) A firm has a fixed cost of $10,000 in its first year of operation. When the firm produces 1,000 units of output, its total costs are $72,400. When it produces 1,001 units of output, its total costs are $72,900. The marginal cost of producing the 1,001st unit of output is more than $525.
(y) A firm has a fixed cost of $8,000 in its first year of operation. When the firm produces 100 units of output, its variable costs are $25,000. The marginal cost of producing the 101st unit of output is $1,200. The total cost of producing 101 units is $34,200.
(z) A firm has a fixed cost of $6,400 in its first year of operation. When the firm produces 600 units of output, its average total cost is $60. The marginal cost of producing the 601st unit of output is $120. The variable cost of producing 601 units is equal to $29,720
(x) A firm has a fixed cost of $10,000 in its first year of operation. When the firm produces 1,000 units of output, its total costs are $72,400. When it produces 1,001 units of output, its total costs are $72,900. The marginal cost of producing the 1,001st unit of output is more than $525.
(y) A firm has a fixed cost of $8,000 in its first year of operation. When the firm produces 100 units of output, its variable costs are $25,000. The marginal cost of producing the 101st unit of output is $1,200. The total cost of producing 101 units is $34,200.
(z) A firm has a fixed cost of $6,400 in its first year of operation. When the firm produces 600 units of output, its average total cost is $60. The marginal cost of producing the 601st unit of output is $120. The variable cost of producing 601 units is equal to $29,720
answer
(y) and (z) only
question
A business firm produces and sells specialty cakes. Last year, the firm produced 12,000 cakes and sold each cake for $20. In producing the 12,000 cakes, it incurred variable costs of $150,000 and a total cost of $183,000. Which of the following statements is (are) correct?
(x) The firm's economic profit for the year was more than $51,250 but less than $54,375.
(y) Fixed costs amounted to $33,000 and average fixed costs are $2.75 per unit for 12,000 cakes.
(z) In producing the 12,000 specialty cakes, the firm's average variable cost was more than $12.25 per cake and its average total cost was less than $15.75 per cake.
(x) The firm's economic profit for the year was more than $51,250 but less than $54,375.
(y) Fixed costs amounted to $33,000 and average fixed costs are $2.75 per unit for 12,000 cakes.
(z) In producing the 12,000 specialty cakes, the firm's average variable cost was more than $12.25 per cake and its average total cost was less than $15.75 per cake.
answer
(y) and (z) only
question
Which of the following statements is (are) correct?
(x) If marginal cost is $10 and rising, average variable cost could be either greater than or less than $10.
(y) If you know the average variable cost of 75 units then you have sufficient information to calculate the marginal cost of the 75th unit.
(z) If you know the average fixed cost of 600 units then you have sufficient information to calculate the average fixed cost of 400 units
(x) If marginal cost is $10 and rising, average variable cost could be either greater than or less than $10.
(y) If you know the average variable cost of 75 units then you have sufficient information to calculate the marginal cost of the 75th unit.
(z) If you know the average fixed cost of 600 units then you have sufficient information to calculate the average fixed cost of 400 units
answer
(x) and (z) only
question
Which of the following statements is (are) correct?
(x) In general, variable cost changes as output changes because more of the variable input is used as more output is produced.
(y) As a firm increases production, average fixed cost declines because fixed costs do not change as output changes.
(z) In general, average total cost is high when a small amount of output is produced because average fixed cost is high.
(x) In general, variable cost changes as output changes because more of the variable input is used as more output is produced.
(y) As a firm increases production, average fixed cost declines because fixed costs do not change as output changes.
(z) In general, average total cost is high when a small amount of output is produced because average fixed cost is high.
answer
(x), (y) and (z)
question
Which of the following statements is (are) correct?
(x) The average variable cost curve declines as quantity increases because variable costs always decrease as output increases.
(y) The average variable cost curve and average total cost curve will eventually intersect as output increases because average fixed cost eventually becomes negative.
(z) The marginal cost curve crosses the average total cost curve at the efficient scale, which occurs at the minimum point on the average total cost curve.
(x) The average variable cost curve declines as quantity increases because variable costs always decrease as output increases.
(y) The average variable cost curve and average total cost curve will eventually intersect as output increases because average fixed cost eventually becomes negative.
(z) The marginal cost curve crosses the average total cost curve at the efficient scale, which occurs at the minimum point on the average total cost curve.
answer
(z) only
question
Which of the following statements is (are) correct?
Select one or more:
a. Long-run average total cost curves are often U-shaped because of increasing specialization of workers at low levels of production and increasing coordination problems at high levels of production.
b. In the long run, fixed inputs become variable inputs.
c. When a factory is operating in the short run, total cost and variable cost are usually the same
d. All of the above
e. A and B, only
Select one or more:
a. Long-run average total cost curves are often U-shaped because of increasing specialization of workers at low levels of production and increasing coordination problems at high levels of production.
b. In the long run, fixed inputs become variable inputs.
c. When a factory is operating in the short run, total cost and variable cost are usually the same
d. All of the above
e. A and B, only
answer
A and B, only
question
Which of the following statements is (are) correct?
(x) If average fixed costs are falling, then the firm is necessarily experiencing economies of scale.
(y) Economies of scale occur when long-run average total costs fall as output increases and diseconomies of scale occur when the long-run average total cost curve is upward sloping.
(z) If the firm's long run average total cost curve is horizontal, then the firm is experiencing constant returns to scale.
(x) If average fixed costs are falling, then the firm is necessarily experiencing economies of scale.
(y) Economies of scale occur when long-run average total costs fall as output increases and diseconomies of scale occur when the long-run average total cost curve is upward sloping.
(z) If the firm's long run average total cost curve is horizontal, then the firm is experiencing constant returns to scale.
answer
(y) and (z) only
question
A U-shaped long-run average total cost curve can be explained by firms increasing their factory size to
(x) avoid coordination problems that occur when the factory is large.
(y) take advantage of greater specialization.
(z) avoid fixed costs.
(x) avoid coordination problems that occur when the factory is large.
(y) take advantage of greater specialization.
(z) avoid fixed costs.
answer
(y) only
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
