Question 1

Refer to the short-run production and cost data. In Figure B curve (3) is

Accepted Answer

A)  AVC and curve (4) is MC.
B)  MC and curve (4) is AVC.
C)  MC and curve (4) is AFC.
D)  AFC and curve (4) is MC.E) B) and C)
F) None of the above

Question 2

3-D printers can reduce the cost of producing items because they

Accepted Answer

A)  eliminate massive factory costs.
B)  reduce transportation costs significantly.
C)  make use of low-cost materials and low-energy requirements.
D)  exploit huge economies of scale in production.E) A) and B)
F) A) and C)

Question 3

Which of the following would contribute most to a firm experiencing "economies of scale"?

Accepted Answer

A)  rising long-run average costs
B)  the law of diminishing marginal returns
C)  specialization of labor and management within the firm
D)  deterioration of information and control within the firmE) All of the above
F) C) and D)

Question 4

Assume that in the short run a firm is producing 200 units of output, has average total costs of $250, and has average variable costs of $150. The firm's total costs are.

Accepted Answer

A)  $50,000.
B)  $30,000.
C)  $100.
D)  $20,000.E) A) and C)
F) A) and B)

Question 5

The following is cost information for the Creamy Crisp Donut Company.Entrepreneur's potential earnings as a salaried worker = $40,000Annual lease on building = $25,000Annual revenue from operations = $420,000Payments to workers = $150,000Utilities (electricity, water, disposal) costs = $8,000Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000Entrepreneur's forgone interest on personal funds used to finance the business = $6,000Creamy Crisp's total economic costs are

Accepted Answer

A)  $309,000.
B)  $183,000.
C)  $111,000.
D)  $189,000.E) All of the above
F) A) and D)

Question 6

At zero units of output, a firm's variable costs are zero.

Accepted Answer

A) True 
 B)False

Question 7

Economies and diseconomies of scale explain

Accepted Answer

A)  the profit-maximizing level of production.
B)  why the firm's long-run average total cost curve is U-shaped.
C)  why the firm's short-run marginal cost curve cuts the short-run average variable cost curve at its minimum point.
D)  the distinction between fixed and variable costs.E) B) and D)
F) All of the above

Question 8

Refer to the provided graph. There are diseconomies of scale

Accepted Answer

A)  from Q₁ to Q₂.
B)  from Q₂ to Q₃.
C)  from Q₃ to Q₄.
D)  beyond Q₄.E) B) and D)
F) B) and C)

Question 9

Answer the question on the basis of the accompanying table that shows average total costs (ATC) for a manufacturing firm whose total fixed costs are $10.  The total cost of producing 4 units of output is

Accepted Answer

A)  $31.
B)  $87.
C)  $124.
D)  $137.E) A) and B)
F) A) and C)

Question 10

If a technological advance increases a firm's labor productivity, we would expect its

Accepted Answer

A)  average total cost curve to rise.
B)  average total cost curve to fall.
C)  total cost curve to rise.
D)  average total cost curve to be unaffected.E) All of the above
F) A) and C)

Question 11

John is determining whether he should close his construction firm. His accountant has advised him to remain open because he is making an accounting profit. As his economist friend, give him advice on whether he should remain in business or shut his business down.

Accepted Answer

John also needs to consider his implicit...

Question 12

Diseconomies of scale arise primarily because

Accepted Answer

A)  the short-run average total cost curve rises when marginal product is increasing.
B)  of the difficulties involved in managing and coordinating a large business enterprise.
C)  firms must be large both absolutely and relative to the market to employ the most efficient productive techniques available.
D)  beyond some point, marginal product declines as additional units of a variable resource (labor) are added to a fixed resource (capital) .E) B) and C)
F) B) and D)

Question 13

Which of the following is not correct?

Accepted Answer

A)  Where marginal product is greater than average product, average product is rising.
B)  Where total product is at a maximum, average product is also at a maximum.
C)  Where marginal product is zero, total product is at a maximum.
D)  Marginal product becomes negative before average product becomes negative.E) A) and B)
F) A) and C)

Question 14

In the short run it is impossible for an expansion of output to increase

Accepted Answer

A)  average total cost.
B)  average fixed cost.
C)  marginal cost.
D)  average variable cost.E) B) and D)
F) B) and C)

Question 15

Use the following data to answer the question. The letters A, B, and C designate three successively larger plant sizes.  In the long run, the firm should use plant size "C" for

Accepted Answer

A)  all possible levels of output.
B)  10 to 30 units of output.
C)  40 to 70 units of output.
D)  all units of output greater than or equal to 80.E) A) and D)
F) All of the above

Question 16

In the diagram it is assumed that

Accepted Answer

A)  some costs are fixed and other costs are variable.
B)  all costs are variable.
C)  the law of diminishing returns determines the shape of the cost curve.
D)  marginal product first falls, but ultimately rises as output is increased.E) A) and D)
F) B) and C)

Question 17

Diseconomies of scale stem primarily from the difficulties in managing and coordinating a large-scale business enterprise.

Accepted Answer

A) True 
 B)False

Question 18

Answer the question on the basis of the following output data for a firm. Assume that the amounts of all nonlabor resources are fixed.  The marginal product of the sixth worker is

Accepted Answer

A)  180 units of output.
B)  30 units of output.
C)  15 units of output.
D)  0 units of output.E) B) and C)
F) None of the above

Question 19

When the total product is at its maximum level, the marginal product is zero.

Accepted Answer

A) True 
 B)False

Question 20

If you owned a small farm, which of the following would most likely be a fixed cost?

Accepted Answer

A)  harvest labor
B)  hail insurance
C)  fertilizer
D)  seedE) B) and D)
F) None of the above

Exam 9: Businesses and the Costs of Production

Correct Answer
verified

Which of the following is not correct?

Correct Answer
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In the short run it is impossible for an expansion of output to increase

Correct Answer
verified

Economies and diseconomies of scale explain

Correct Answer
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Which of the following would contribute most to a firm experiencing "economies of scale"?

Correct Answer
verified

Refer to the provided graph. There are diseconomies of scale

Correct Answer
verified

Refer to the short-run production and cost data. In Figure B curve (3) is

Correct Answer
verified

Answer the question on the basis of the following output data for a firm. Assume that the amounts of all nonlabor resources are fixed. The marginal product of the sixth worker is

Correct Answer
verified

When the total product is at its maximum level, the marginal product is zero.

Correct Answer
verified

If you owned a small farm, which of the following would most likely be a fixed cost?

Correct Answer
verified

At zero units of output, a firm's variable costs are zero.

Correct Answer
verified

Use the following data to answer the question. The letters A, B, and C designate three successively larger plant sizes. In the long run, the firm should use plant size "C" for

Correct Answer
verified

In the diagram it is assumed that

Correct Answer
verified

John is determining whether he should close his construction firm. His accountant has advised him to remain open because he is making an accounting profit. As his economist friend, give him advice on whether he should remain in business or shut his business down.

Correct Answer
verified
John also needs to consider his implicit...
View Answer

Assume that in the short run a firm is producing 200 units of output, has average total costs of $250, and has average variable costs of $150. The firm's total costs are.

Correct Answer
verified

Answer the question on the basis of the accompanying table that shows average total costs (ATC) for a manufacturing firm whose total fixed costs are $10. The total cost of producing 4 units of output is

Correct Answer
verified

3-D printers can reduce the cost of producing items because they

Correct Answer
verified

If a technological advance increases a firm's labor productivity, we would expect its

Correct Answer
verified

Diseconomies of scale stem primarily from the difficulties in managing and coordinating a large-scale business enterprise.

Correct Answer
verified

Diseconomies of scale arise primarily because

Correct Answer
verified

Exam 9: Businesses and the Costs of Production

Correct AnswerverifiedShow Answer

Which of the following is not correct?

Correct AnswerverifiedShow Answer

In the short run it is impossible for an expansion of output to increase

Correct AnswerverifiedShow Answer

Economies and diseconomies of scale explain

Correct AnswerverifiedShow Answer

Which of the following would contribute most to a firm experiencing "economies of scale"?

Correct AnswerverifiedShow Answer

Refer to the provided graph. There are diseconomies of scale

Correct AnswerverifiedShow Answer

Refer to the short-run production and cost data. In Figure B curve (3) is

Correct AnswerverifiedShow Answer

Answer the question on the basis of the following output data for a firm. Assume that the amounts of all nonlabor resources are fixed. The marginal product of the sixth worker is

Correct AnswerverifiedShow Answer

When the total product is at its maximum level, the marginal product is zero.

Correct AnswerverifiedShow Answer

If you owned a small farm, which of the following would most likely be a fixed cost?

Correct AnswerverifiedShow Answer

At zero units of output, a firm's variable costs are zero.

Correct AnswerverifiedShow Answer

Use the following data to answer the question. The letters A, B, and C designate three successively larger plant sizes. In the long run, the firm should use plant size "C" for

Correct AnswerverifiedShow Answer

In the diagram it is assumed that

Correct AnswerverifiedShow Answer

John is determining whether he should close his construction firm. His accountant has advised him to remain open because he is making an accounting profit. As his economist friend, give him advice on whether he should remain in business or shut his business down.

Correct AnswerverifiedJohn also needs to consider his implicit...View AnswerShow Answer

Assume that in the short run a firm is producing 200 units of output, has average total costs of $250, and has average variable costs of $150. The firm's total costs are.

Correct AnswerverifiedShow Answer

Answer the question on the basis of the accompanying table that shows average total costs (ATC) for a manufacturing firm whose total fixed costs are $10. The total cost of producing 4 units of output is

Correct AnswerverifiedShow Answer

3-D printers can reduce the cost of producing items because they

Correct AnswerverifiedShow Answer

If a technological advance increases a firm's labor productivity, we would expect its

Correct AnswerverifiedShow Answer

Diseconomies of scale stem primarily from the difficulties in managing and coordinating a large-scale business enterprise.

Correct AnswerverifiedShow Answer

Diseconomies of scale arise primarily because

Correct AnswerverifiedShow Answer

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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
John also needs to consider his implicit...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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