question
If long-run average total cost decreases as the quantity of output increases, the firm is experiencing.
a. coordination problems arising from the large size of the firm.
b. diseconomies of scale.
c. fixed costs greatly exceeding variable costs.
d. economies of scale.
a. coordination problems arising from the large size of the firm.
b. diseconomies of scale.
c. fixed costs greatly exceeding variable costs.
d. economies of scale.
answer
d. economies of scale
question
If marginal cost is rising,
a. average fixed cost must be rising.
b. marginal product must be falling.
c. marginal product must be rising.
d. average variable cost must be falling.
a. average fixed cost must be rising.
b. marginal product must be falling.
c. marginal product must be rising.
d. average variable cost must be falling.
answer
b. marginal product must be falling
question
Let L represent the number of workers hired by a firm, and let Q represent that firm's quantity of output. Assume two points on the firm's production function are (L = 12, Q = 122) and (L = 13, Q = 130). Then the marginal product of the 13th worker is
a. 10 units of output.
b. 122 units of output.
c. 8 units of output.
d. 132 units of output
a. 10 units of output.
b. 122 units of output.
c. 8 units of output.
d. 132 units of output
answer
c. 8 units of output
question
Refer to Table 13-8. What is the average variable cost of producing 5 units of output?
a. $4
b. $5
c. $44
d. $40
a. $4
b. $5
c. $44
d. $40
answer
d. $40
question
Brady Industries has average variable costs of $1 and average total costs of $3 when it produces 500 units of output. The firm's total fixed costs equal
a. $2,000.
b. $2.
c. $1,000.
d. $4.
a. $2,000.
b. $2.
c. $1,000.
d. $4.
answer
c. $1000
question
Which of the following is an example of an implicit cost?
a. The owner of a firm forgoing an opportunity to earn a large salary working for a Wall Street brokerage firm
b. Rent paid by the firm to lease office space
c. Interest paid on the firm's debt
d. Wages paid to workers
a. The owner of a firm forgoing an opportunity to earn a large salary working for a Wall Street brokerage firm
b. Rent paid by the firm to lease office space
c. Interest paid on the firm's debt
d. Wages paid to workers
answer
a. The owner of a firm forgoing an opportunity to earn a large salary
question
Refer to Table 13-7. What is the value of C?
a. $200
b. $25
c. $50
d. $100
a. $200
b. $25
c. $50
d. $100
answer
d. $100
question
Average total cost is very high when a small amount of output is produced because
a. average variable cost is high.
b. average fixed cost is high.
c. marginal product is high.
d. marginal cost is high.
a. average variable cost is high.
b. average fixed cost is high.
c. marginal product is high.
d. marginal cost is high.
answer
b. average fixed cost is high
question
Refer to Table 13-9. For the firm whose production function and costs are specified in the table, its average-variable-cost curve is
a. U-shaped.
b. increasing.
c. decreasing.
d. constant.
a. U-shaped.
b. increasing.
c. decreasing.
d. constant.
answer
b. increasing
question
On a 100-acre farm, a farmer is able to produce 3,000 bushels of wheat when he hires 2 workers. He is able to produce 4,400 bushels of wheat when he hires 3 workers. Which of the following possibilities is consistent with the property of diminishing marginal product?
a. The farmer is able to produce 6,200 bushels of wheat when he hires 4 workers.
b. The farmer is able to produce 5,800 bushels of wheat when he hires 4 workers.
c. The farmer is able to produce 5,600 bushels of wheat when he hires 4 workers.
d. The farmer is able to produce 6,000 bushels of wheat when he hires 4 workers.
a. The farmer is able to produce 6,200 bushels of wheat when he hires 4 workers.
b. The farmer is able to produce 5,800 bushels of wheat when he hires 4 workers.
c. The farmer is able to produce 5,600 bushels of wheat when he hires 4 workers.
d. The farmer is able to produce 6,000 bushels of wheat when he hires 4 workers.
answer
c. The farmer is able to produce 5,600 bushels of wheat when he hires 4 workers
question
Refer to Table 13-12. Firm 4's efficient scale occurs at what quantity?
a. 5
b. 2
c. 4
d. 3
a. 5
b. 2
c. 4
d. 3
answer
d. 3
question
Tom's Tent Company has total fixed costs of $300,000 per year. The firm's average variable cost is $80 for 10,000 tents. At that level of output, the firm's average total costs equal
a. $100
b. $80
c. $110
d. $90
a. $100
b. $80
c. $110
d. $90
answer
$110
question
Firms may experience diseconomies of scale when
a. large management structures are bureaucratic and inefficient.
b. there are too few employees, and managers do not have enough to do.
c. average fixed costs begin to rise again.
d. they are too small to take advantage of specialization.
a. large management structures are bureaucratic and inefficient.
b. there are too few employees, and managers do not have enough to do.
c. average fixed costs begin to rise again.
d. they are too small to take advantage of specialization.
answer
a. large management structures are bureaucratic and inefficient
question
Jacqui decides to open her own business and earns $50,000 in accounting profit the first year. When deciding to open her own business, she withdrew $20,000 from her savings, which earned 5 percent interest. She also turned down three separate job offers with annual salaries of $30,000, $40,000, and $45,000. What is Jacqui's economic profit from running her own business?
a. $4,000
b. $19,000
c. −$6,000
d. −$56,000
a. $4,000
b. $19,000
c. −$6,000
d. −$56,000
answer
a. $4000
question
Refer to Table 13-5 . The Wooden Chair Factory experiences diminishing marginal product of labor with the addition of which worker?
a. The fifth worker
b. The fourth worker
c. The sixth worker
d. The third worker
a. The fifth worker
b. The fourth worker
c. The sixth worker
d. The third worker
answer
c. The sixth worker
question
Billy's Bean Bag Emporium produced 300 bean bag chairs but sold only 275 of the units it produced. The average cost of production for each unit of output produced was $100. The price for each of the 275 units sold was $95. Total profit for Billy's Bean Bag Emporium would be
a. −$3,875.
b. $28,500.
c. $30,000.
d. $26,125.
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a. −$3,875.
b. $28,500.
c. $30,000.
d. $26,125.
Hide Feedback
answer
a. -3875
question
Korie wants to start her own business making custom furniture. She can purchase a factory that costs $400,000. Korie currently has $500,000 in the bank earning 3 percent interest per year.
Refer to Scenario 13-1. Suppose Korie purchases the factory using $200,000 of her own money and $200,000 borrowed from a bank at an interest rate of 6 percent. What is Korie's annual opportunity cost of purchasing the factory?
a. $18,000
b. $6,000
c. $15,000
d. $3,000
Refer to Scenario 13-1. Suppose Korie purchases the factory using $200,000 of her own money and $200,000 borrowed from a bank at an interest rate of 6 percent. What is Korie's annual opportunity cost of purchasing the factory?
a. $18,000
b. $6,000
c. $15,000
d. $3,000
answer
A. 18000
question
or a large firm that produces and sells automobiles, which of the following costs would be a variable cost?
a. The cost of internet advertising incurred each year
b. The rent that the firm pays for office space in a suburb of St. Louis
c. The cost of the steel that is used in producing automobiles
d. The $20 million payment that the firm pays each year for accounting service
a. The cost of internet advertising incurred each year
b. The rent that the firm pays for office space in a suburb of St. Louis
c. The cost of the steel that is used in producing automobiles
d. The $20 million payment that the firm pays each year for accounting service
answer
The cost the steel that is used in producing automobiles
question
Suppose a certain firm is able to produce 165 units of output per day when 15 workers are hired. The firm is able to produce 181 units of output per day when 16 workers are hired, holding other inputs fixed. The marginal product of the 16th worker is
a. 11 units of output.
b. 16 units of output.
c. 10 units of output.
d. 181 units of output.
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a. 11 units of output.
b. 16 units of output.
c. 10 units of output.
d. 181 units of output.
Hide Feedback
answer
a. 11 units of output
question
efer to Table 13-7. What is the value of F?
a. $100
b. $200
c. $150
d. $50
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a. $100
b. $200
c. $150
d. $50
Hide Feed
answer
$100
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