Question 1

Diminishing marginal product:

Accepted Answer

A)  causes the variable cost curve to become flatter.
B)  causes the variable cost curve to become steeper.
C)  has no relation to the variable cost curve.
D)  causes the fixed cost curve to become flatter.E) B) and D)
F) B) and C)

Question 2

Costs that require a firm to spend money are considered:

Accepted Answer

A)  fixed costs.
B)  variable costs.
C)  explicit costs.
D)  implicit costs.E) C) and D)
F) B) and C)

Question 3

Profit is the:

Accepted Answer

A)  total revenue minus total cost.
B)  sum of total revenue and total cost.
C)  total cost minus total revenue.
D)  None of these is true.E) A) and B)
F) B) and C)

Question 4

Suppose Larry's Lariats produced 25,000 lassos and sold each for $10.What was the total revenue for the company?

Accepted Answer

A)  $250,000
B)  $25,000
C)  $2,500
D)  $2,500,000E) A) and D)
F) None of the above

Question 5

Sanford wants to start up his own business,and needs $50,000 to get it off the ground.He can either withdraw it from his savings account,where he currently earns 2 percent,or he can take out a loan for $50,000 and pay 2 percent interest.Sanford should compare:

Accepted Answer

A)  the implicit cost of $1,000 to the explicit cost of $51,000 and choose to use his savings.
B)  the implicit cost of $51,000 to the explicit cost of $1,000 and choose to borrow the money.
C)  the explicit cost of $1,000 to the implicit cost of $1,000 and realize it will cost the same whether he borrows it or uses his savings for the venture.
D)  the explicit cost of $1,000 to the implicit cost of $51,000 and choose to borrow the money.E) None of the above
F) B) and D)

Question 6

The slope of the total production curve becomes:

Accepted Answer

A)  steeper when marginal product increases.
B)  flatter when marginal product increases.
C)  steeper when marginal product decreases.
D)  None of these is true.E) A) and D)
F) B) and C)

Question 7

A college student is thinking about running an ice-cream truck over the summer.Which of the following would likely be included in the total cost of the business?

Accepted Answer

A)  The cost of ice cream cones
B)  The cost of the truck
C)  The cost of gasoline
D)  All of these would be included in total cost.E) B) and D)
F) C) and D)

Question 8

The short run:

Accepted Answer

A)  means the firm is fixed in scale.
B)  means at least one input cannot change.
C)  lasts until the firm can change all inputs.
D)  All of these are true.E) A) and D)
F) A) and B)

Question 9

A soda factory employs seven workers and produces 500 bottles of soda a day.The company reduces the workforce to six workers and output is now 450 bottles a day.The seventh worker:

Accepted Answer

A)  had a marginal product of 50 bottles of soda.
B)  caused average product to fall.
C)  had a lower marginal product than the sixth worker.
D)  All of these are true.E) C) and D)
F) B) and D)

Question 10

When the slope of the total production curve begins to flatten:

Accepted Answer

A)  the marginal product must be decreasing.
B)  diminishing marginal product must be beginning.
C)  additional inputs adds less to total production than the inputs added before.
D)  All of these are true.E) C) and D)
F) B) and C)

Question 11

Total revenue is:

Accepted Answer

A)  the amount that a firm spends on all inputs that go into producing a good or service.
B)  the quantity sold multiplied by the price paid for each unit.
C)  the quantity produced multiplied by the cost of producing each unit.
D)  the amount that an individual gets paid over a specified period of time,typically annually.E) A) and B)
F) C) and D)

Question 12

The marginal product curve:

Accepted Answer

A)  shows how many extra outputs are created with each additional input.
B)  typically decreases at low levels of input,but increases as input increases.
C)  cannot be negative,since total output cannot be negative.
D)  None of these is true.E) None of the above
F) B) and D)

Question 13

When a firm can achieve economies of scale by expanding,its long-run ATC curve:

Accepted Answer

A)  slopes down.
B)  slopes upward.
C)  is flat.
D)  Any of these is possible.E) B) and C)
F) A) and D)

Question 14

Suppose Larry's Lariats produces lassos,and uses nine feet of rope to make each lasso.The rope is put into a machine that automatically cuts it to the right length,then seals the ends to prevent fraying.The rope is then hand tied,dipped,and wound before being placed in a packaging machine to prepare it for retail sale.The total costs for this company would include:

Accepted Answer

A)  the cost of rope.
B)  employee's wages.
C)  the rope-cutting machine.
D)  All of these expenses would be included in total cost.E) B) and D)
F) B) and C)

Question 15

If a sandwich shop ceases to make sandwiches,which of the following costs will it still incur?

Accepted Answer

A)  Employee's wages
B)  Sandwich ingredients
C)  Rented storefront
D)  None of these costs will be incurred if they no longer make sandwiches.E) All of the above
F) A) and B)

Question 16

Marginal product is represented by:

Accepted Answer

A)  the slope of the total production curve.
B)  the x-axis of the total production curve.
C)  total product minus the total cost.
D)  total revenue minus total cost.E) None of the above
F) C) and D)

Question 17

Assume a company is at a point in production where marginal product is below average product.Which of the following must be true?

Accepted Answer

A)  Diminishing marginal product must have set it.
B)  Marginal product must be falling.
C)  Average product must be falling.
D)  All of these are true.E) None of the above
F) A) and B)

Question 18

If a firm produces nothing,then its:

Accepted Answer

A)  variable costs equal zero.
B)  fixed costs equal zero.
C)  total costs equal zero.
D)  All of these are true.E) None of the above
F) A) and D)

Question 19

Mika withdraws $100,000 from her trust fund to start up her own manicure business.The trust fund earns 4 percent interest.In order to properly account for all costs of her business,Mika must not forget:

Accepted Answer

A)  the implicit cost of $104,000.
B)  the implicit cost of $4,000.
C)  the explicit cost of $104,000.
D)  the explicit cost of $4,000.E) A) and B)
F) B) and C)

Question 20

Total revenue is:

Accepted Answer

A)  price multiplied by quantity of each item sold.
B)  cost multiplied by quantity of each item produced.
C)  price multiplied by quantity subtracted from total cost.
D)  None of these is true.E) All of the above
F) B) and C)

Exam 12: The Costs of Production

The marginal product curve:

Correct Answer
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A soda factory employs seven workers and produces 500 bottles of soda a day.The company reduces the workforce to six workers and output is now 450 bottles a day.The seventh worker:

Correct Answer
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Correct Answer
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Marginal product is represented by:

Correct Answer
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Total revenue is:

Correct Answer
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Mika withdraws $100,000 from her trust fund to start up her own manicure business.The trust fund earns 4 percent interest.In order to properly account for all costs of her business,Mika must not forget:

Correct Answer
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The short run:

Correct Answer
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Profit is the:

Correct Answer
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If a sandwich shop ceases to make sandwiches,which of the following costs will it still incur?

Correct Answer
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The slope of the total production curve becomes:

Correct Answer
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Total revenue is:

Correct Answer
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Diminishing marginal product:

Correct Answer
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A college student is thinking about running an ice-cream truck over the summer.Which of the following would likely be included in the total cost of the business?

Correct Answer
verified

Suppose Larry's Lariats produced 25,000 lassos and sold each for $10.What was the total revenue for the company?

Correct Answer
verified

If a firm produces nothing,then its:

Correct Answer
verified

Assume a company is at a point in production where marginal product is below average product.Which of the following must be true?

Correct Answer
verified

Sanford wants to start up his own business,and needs $50,000 to get it off the ground.He can either withdraw it from his savings account,where he currently earns 2 percent,or he can take out a loan for $50,000 and pay 2 percent interest.Sanford should compare:

Correct Answer
verified

When the slope of the total production curve begins to flatten:

Correct Answer
verified

When a firm can achieve economies of scale by expanding,its long-run ATC curve:

Correct Answer
verified

Costs that require a firm to spend money are considered:

Correct Answer
verified

Exam 12: The Costs of Production

The marginal product curve:

Correct AnswerverifiedShow Answer

A soda factory employs seven workers and produces 500 bottles of soda a day.The company reduces the workforce to six workers and output is now 450 bottles a day.The seventh worker:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Marginal product is represented by:

Correct AnswerverifiedShow Answer

Total revenue is:

Correct AnswerverifiedShow Answer

Mika withdraws $100,000 from her trust fund to start up her own manicure business.The trust fund earns 4 percent interest.In order to properly account for all costs of her business,Mika must not forget:

Correct AnswerverifiedShow Answer

The short run:

Correct AnswerverifiedShow Answer

Profit is the:

Correct AnswerverifiedShow Answer

If a sandwich shop ceases to make sandwiches,which of the following costs will it still incur?

Correct AnswerverifiedShow Answer

The slope of the total production curve becomes:

Correct AnswerverifiedShow Answer

Total revenue is:

Correct AnswerverifiedShow Answer

Diminishing marginal product:

Correct AnswerverifiedShow Answer

A college student is thinking about running an ice-cream truck over the summer.Which of the following would likely be included in the total cost of the business?

Correct AnswerverifiedShow Answer

Suppose Larry's Lariats produced 25,000 lassos and sold each for $10.What was the total revenue for the company?

Correct AnswerverifiedShow Answer

If a firm produces nothing,then its:

Correct AnswerverifiedShow Answer

Assume a company is at a point in production where marginal product is below average product.Which of the following must be true?

Correct AnswerverifiedShow Answer

Sanford wants to start up his own business,and needs $50,000 to get it off the ground.He can either withdraw it from his savings account,where he currently earns 2 percent,or he can take out a loan for $50,000 and pay 2 percent interest.Sanford should compare:

Correct AnswerverifiedShow Answer

When the slope of the total production curve begins to flatten:

Correct AnswerverifiedShow Answer

When a firm can achieve economies of scale by expanding,its long-run ATC curve:

Correct AnswerverifiedShow Answer

Costs that require a firm to spend money are considered:

Correct AnswerverifiedShow Answer

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