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The cost of producing an additional unit of output is the firm's
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marginal cost
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Variable cost divided by quantity produced is
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none of the above is correct (average total cost, marginal cost, profit)
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when average cost is greater than marginal cost, marginal cost must be
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the direction of change in marginal cost cannot be determined from this situation
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which of the following is an implicit cost
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foregone rent on office space owned and used by the firm
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refer to figure 13-7; which of the figures represents the marginal cost curve for a firm
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figure 1 (nike swoosh)
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economists assume that the goal of the firm is to maximize
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total profits
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refer to table 13-5; the average total cost of producing one widget is
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$11
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which of the following expressions is correct
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average total cost= total cost/ quantity of output
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those things that must be forgone to acquire a good are called
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opportunity costs
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a total- cost curve shows the relationship between the
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quantity of output produced and the total cost of production
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Refer to Figure 13-2. Which of the following statements best captures the nature of the underlying production function?
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output increases at a decreasing rate with additional units of input
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marginal cost equals
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the slope of the total cost curve
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economies of scale occur when
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long- run average total costs fall as output increases
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Refer to Table 13-6. During the week of July 4th, Adrian doesn't box any chocolates. What are her costs during the week?
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$150
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economists normally assume that the goal of a firm is to
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maximize profit
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Refer to Table 13-10. Which firm has economies of scale and then diseconomies of scale as output increases from 1 to 7?
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firm 1
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A certain firm manufactures and sells computer chips. Last year it sold 2 million chips at a price of $10 per chip. For last year, the firm's
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total revenue amounted to $20 million
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The firm's efficient scale is the quantity of output that minimizes
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average total cost
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In the long run for Firm A, total cost is $105 when output is 3 units and $120 when output is 4 units. Does Firm A exhibit economies or diseconomies of scale?
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economies of scale, since average total cost is falling as output rises
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For a firm, the relationship between the quantity of inputs and quantity of output is called the
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production function
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Refer to Table 13-10. Which firm has economies of scale over the entire range of output?
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firm 2
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Refer to Table 13-2. What is the marginal product of the fourth worker?
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80
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Refer to Figure 13-6. Which of the curves is most likely to represent average fixed cost?
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D
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implicit costs
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do not require an outlay of money by the firm
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Refer to Table 13-5. The average variable cost of producing four widgets is
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$2.50
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Kevin quit his $65,000 a year corporate lawyer job to open up his own law practice. In Kevin's first year in business his total revenue equaled $150,000. Kevin's explicit cost during the year totaled $85,000. Using the information from Kevin's first year in business, what is his economic profit?
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$0
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Smith Tire Company has total fixed costs of $300,000 per year. The firm's average variable cost is $80 for 10,000 tires. At that level of output, the firm's average total costs equal
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$110
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Average total cost is very high when a small amount of output is produced because
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average fixed cost is high
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which of the following statements is false?
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If marginal cost is rising, then average variable cost must be rising
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an example of an explicit cost of production would be
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lease payments for the land on which a firm's factory stands
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which of the following expressions is correct
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accounting profit= total revenue- explicit costs
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Jane decides to open her own business and earns $50,000 in accounting profit the first year. When deciding to open her own business she turned down three separate job offers with annual salaries of $30,000, $40,000, and $45,000. What is Jane's economic profit from running her own business?
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$5,000
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Scenario 13-5 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 13-5. The firm's fixed costs amounted to
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$17,000
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Scenario 13-5 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 13-5. In producing the 7,000 staplers, the firm's average fixed cost was
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$2.43
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Scenario 13-5 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 13-5. In producing the 7,000 staplers, the firm's average variable cost was
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$4
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Scenario 13-5 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 13-5. In producing the 7,000 staplers, the firm's average total cost was
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$6.43
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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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the cost of bookkeeping services
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At Bert's Bootery, the total cost of producing twenty pairs of boots is $400. The marginal cost of producing the twenty-first pair of boots is $83. We can conclude that the average
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total cost of 21 pairs of boots is $23
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If Franco's Pizza Parlor knows that the marginal cost of the 500th pizza is $3.50 and that the average total cost of making 499 pizzas is $3.30, then
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average costs are rising at Q=500
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Refer to Figure 13-8. Which of the curves is most likely to characterize the short-run average total cost curve of the smallest factory?
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ATCA
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Refer to Figure 13-8. Which curve represents the long-run average total cost?
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ATCD
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Refer to Figure 13-9. The three average total cost curves on the diagram correspond to three different
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factory sizes
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Refer to Figure 13-9. The firm experiences economies of scale if it changes its level of output
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from Q1 to Q2
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Refer to Figure 13-9. The firm experiences diseconomies of scale if it changes its level of output
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from Q4 to Q5
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Refer to Table 13-10. Which firm has economies of scale over the entire range of output?
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firm 2
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Since the 1980s, Wal-Mart stores have appeared in almost every community in America. Wal-Mart buys its goods in large quantities and, therefore, at cheaper prices. Wal-Mart also locates its stores where land prices are low, usually outside of the community business district. Many customers shop at Wal-Mart because of low prices. Local retailers, like the neighborhood drug store, often go out of business because they lose customers. This story demonstrates that
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there are economies of scale in retail stores
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Some reasons that firms may experience diseconomies of scale include that
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larger management structures may be bureaucratic and inefficient
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the efficient scale of the firm is the quantity of output that
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minimizes average total cost
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the length of the short run
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is different for different types of firms
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