Question 1

The diagram shows the short-run average total cost curves for five different plant sizes of a firm. If in the long run the firm should produce output 0 x, it should do it with a plant of size

Accepted Answer

A)  #4.
B)  #3.
C)  #2.
D)  #1.

Question 2

Fixed costs are associated with

Accepted Answer

A)  highly adjustable inputs such as labor.
B)  both the short run and the long run.
C)  the short run only.
D)  the long run only.

Question 3

Plant sizes get larger as you move from ATC-1 to ATC-4.  Over what range of output are economies of scale experienced by this firm?

Accepted Answer

A)  1,500 to 3,000
B)  1,500 to 3,500
C)  2,000 to 3,500
D)  2,000 to 4,000

Question 4

When a firm doubles its inputs and finds that its output has more than doubled, this is known as

Accepted Answer

A)  economies of scale.
B)  constant returns to scale.
C)  diseconomies of scale.
D)  a violation of the law of diminishing returns.

Question 5

Zero economic profits mean that the firm is earning

Accepted Answer

A)  revenues that just cover all of its actual expenses.
B)  accounting profits that are equal to its accounting costs.
C)  as much as what it would have earned in its best alternative business venture.
D)  revenues that are equal to its accounting profits.

Question 6

Diseconomies of scale occur mainly because

Accepted Answer

A)  of the law of diminishing returns.
B)  firms in an industry must be relatively large in order to use the most efficient production techniques.
C)  of the inherent difficulties involved in managing and coordinating a large business enterprise.
D)  the short-run average total cost curve rises when marginal product is greater than average total cost.

Question 7

Which of the following is a typical example of a fixed cost of production in a manufacturing firm?

Accepted Answer

A)  depreciation of capital
B)  wages paid to hourly workers
C)  electricity charges
D)  sales taxes due

Question 8

Explain how 3-D printers could change the world of mass production.

Accepted Answer

3-D printers are an inexpensive way of p...

Question 9

The basic difference between the short run and the long run is that

Accepted Answer

A)  all costs are fixed in the short run, but all costs are variable in the long run.
B)  the law of diminishing returns applies in the long run but not in the short run.
C)  at least one resource is fixed in the short run, while all resources are variable in the long run.
D)  economies of scale may be present in the short run but not in the long run.

Question 10

The table shows three short-run cost schedules for three plants of different sizes that a firm might build in the long run.  What is the long-run average cost of producing 10 units of output?

Accepted Answer

A)  $10
B)  $15
C)  $20
D)  $45

Question 11

The mass affordability of the iPhone is the result of the following, except

Accepted Answer

A)  mass production and spreading of fixed costs.
B)  the law of diminishing returns in manufacturing.
C)  economies of scale and large volumes.
D)  mass sales and distribution cost savings.

Question 12

The following is cost information for the Creamy Crisp Donut Company.Entrepreneur's potential earnings as a salaried worker = $48,000Annual lease on building = $20,000Annual revenue from operations = $280,000Payments to workers = $118,000Utilities (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 economic profit is

Accepted Answer

A)  $280,000.
B)  $146,000.
C)  $134,000.
D)  $0.

Question 13

Refer to the provided graph, which shows the total product (TP) curve. At which point does diminishing marginal returns set in?

Accepted Answer

A)  point a
B)  point b
C)  point c
D)  point d

Question 14

If the total variable cost of 9 units of output is $90 and the total variable cost of 10 units of output is $120, then

Accepted Answer

A)  the average variable cost of 10 units is $10.
B)  the average variable cost of 9 units is $10.
C)  the marginal cost of the tenth unit is $90.
D)  the firm is operating in the range of increasing marginal returns.

Question 15

Refer to the provided table. The total variable cost of producing 5 units of output is

Accepted Answer

A)  $10.
B)  $14.60.
C)  $63.
D)  $73.

Question 16

In which of the following industries are economies of scale exhausted at relatively low levels of output?

Accepted Answer

A)  aircraft production
B)  automobile manufacturing
C)  concrete mixing
D)  newspaper printing

Question 17

The larger the diameter of a natural gas pipeline, the lower is the average total cost of transmitting 1,000 cubic feet of gas 1,000 miles. This is an example of one reason for

Accepted Answer

A)  economies of scale.
B)  diminishing returns to scale.
C)  diminishing marginal returns.
D)  increasing marginal cost.

Question 18

The law of diminishing returns explains why short-run marginal cost curves are upsloping.

Accepted Answer

A) True 
 B)False

Question 19

Refer to the cost table provided. Diminishing marginal returns begins to set in with the production of which unit of output?

Accepted Answer

A)  2
B)  3
C)  4
D)  5

Question 20

Refer to the diagram. Economies of scale

Accepted Answer

A)  are evident over the entire range of output.
B)  develop over the 0 Q₁ range of output.
C)  begin at output Q₃.
D)  occur only over the Q₁ Q₃ range of output.

Exam 9: Businesses and the Costs of Production

In which of the following industries are economies of scale exhausted at relatively low levels of output?

Correct Answer
verified

Explain how 3-D printers could change the world of mass production.

Correct Answer
verified
3-D printers are an inexpensive way of p...
View Answer

When a firm doubles its inputs and finds that its output has more than doubled, this is known as

Correct Answer
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Refer to the cost table provided. Diminishing marginal returns begins to set in with the production of which unit of output?

Correct Answer
verified

Refer to the provided table. The total variable cost of producing 5 units of output is

Correct Answer
verified

The mass affordability of the iPhone is the result of the following, except

Correct Answer
verified

Refer to the diagram. Economies of scale

Correct Answer
verified

The law of diminishing returns explains why short-run marginal cost curves are upsloping.

Correct Answer
verified

The basic difference between the short run and the long run is that

Correct Answer
verified

Correct Answer
verified

Diseconomies of scale occur mainly because

Correct Answer
verified

The table shows three short-run cost schedules for three plants of different sizes that a firm might build in the long run. What is the long-run average cost of producing 10 units of output?

Correct Answer
verified

Plant sizes get larger as you move from ATC-1 to ATC-4. Over what range of output are economies of scale experienced by this firm?

Correct Answer
verified

The diagram shows the short-run average total cost curves for five different plant sizes of a firm. If in the long run the firm should produce output 0 x, it should do it with a plant of size

Correct Answer
verified

Which of the following is a typical example of a fixed cost of production in a manufacturing firm?

Correct Answer
verified

Zero economic profits mean that the firm is earning

Correct Answer
verified

Refer to the provided graph, which shows the total product (TP) curve. At which point does diminishing marginal returns set in?

Correct Answer
verified

If the total variable cost of 9 units of output is $90 and the total variable cost of 10 units of output is $120, then

Correct Answer
verified

Fixed costs are associated with

Correct Answer
verified

The larger the diameter of a natural gas pipeline, the lower is the average total cost of transmitting 1,000 cubic feet of gas 1,000 miles. This is an example of one reason for

Correct Answer
verified

Exam 9: Businesses and the Costs of Production

In which of the following industries are economies of scale exhausted at relatively low levels of output?

Correct AnswerverifiedShow Answer

Explain how 3-D printers could change the world of mass production.

Correct Answerverified3-D printers are an inexpensive way of p...View AnswerShow Answer

When a firm doubles its inputs and finds that its output has more than doubled, this is known as

Correct AnswerverifiedShow Answer

Refer to the cost table provided. Diminishing marginal returns begins to set in with the production of which unit of output?

Correct AnswerverifiedShow Answer

Refer to the provided table. The total variable cost of producing 5 units of output is

Correct AnswerverifiedShow Answer

The mass affordability of the iPhone is the result of the following, except

Correct AnswerverifiedShow Answer

Refer to the diagram. Economies of scale

Correct AnswerverifiedShow Answer

The law of diminishing returns explains why short-run marginal cost curves are upsloping.

Correct AnswerverifiedShow Answer

The basic difference between the short run and the long run is that

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Diseconomies of scale occur mainly because

Correct AnswerverifiedShow Answer

The table shows three short-run cost schedules for three plants of different sizes that a firm might build in the long run. What is the long-run average cost of producing 10 units of output?

Correct AnswerverifiedShow Answer

Plant sizes get larger as you move from ATC-1 to ATC-4. Over what range of output are economies of scale experienced by this firm?

Correct AnswerverifiedShow Answer

The diagram shows the short-run average total cost curves for five different plant sizes of a firm. If in the long run the firm should produce output 0 x, it should do it with a plant of size

Correct AnswerverifiedShow Answer

Which of the following is a typical example of a fixed cost of production in a manufacturing firm?

Correct AnswerverifiedShow Answer

Zero economic profits mean that the firm is earning

Correct AnswerverifiedShow Answer

Refer to the provided graph, which shows the total product (TP) curve. At which point does diminishing marginal returns set in?

Correct AnswerverifiedShow Answer

If the total variable cost of 9 units of output is $90 and the total variable cost of 10 units of output is $120, then

Correct AnswerverifiedShow Answer

Fixed costs are associated with

Correct AnswerverifiedShow Answer

The larger the diameter of a natural gas pipeline, the lower is the average total cost of transmitting 1,000 cubic feet of gas 1,000 miles. This is an example of one reason for

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
3-D printers are an inexpensive way of p...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

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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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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Correct Answer
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