Question 1

The short run is a period of time during which all costs are fixed costs.

Accepted Answer

A) True 
 B)False

Question 2

The law of diminishing returns describes the:

Accepted Answer

A)   relationship between total costs and total revenues.
B)   profit-maximizing position of a firm.
C)   relationship between resource inputs and product outputs in the short run.
D)   relationship between resource inputs and product outputs in the long run.

Question 3

(Last Word) Which of the following is a predicted result of the increased use of additive manufacturing (using 3-D printers) ?

Accepted Answer

A)   Economies of scale in manufacturing will be eliminated,driving up production costs and prices.
B)   Lower prices of manufactured goods through the elimination of large fixed costs and transportation costs.
C)   Monopolization of manufactured goods industries,as few individuals can afford additive manufacturing technology.
D)   Significant increases in the fixed costs of producing manufactured goods.

Question 4

Answer the question on the basis of the following information:   Number of  Workers  Total  Product 10283254305634MarginalProduct−−8103\begin{array}{ccc}\begin{array}{ccc}\begin{array}{c}	ext { Number of } \	ext { Workers }\end{array} & & \begin{array}{c}	ext { Total } \	ext { Product }\end{array} \1 & & 0 \2 & & 8 \\3 & & 25 \4 & & 30 \5 & & \6 & & 34\end{array}\begin{array}{c}Marginal\Product\--\8\10\\\3\\\end{array}\end{array} Number of  Workers ​123456​​ Total  Product ​08253034​MarginalProduct−−8103​​  Refer to the data.When two workers are employed:

Accepted Answer

A)   total product is 20.
B)   total product is 18.
C)   average product is 10.
D)   total product cannot be determined from the information given.

Question 5

Marginal cost is the:

Accepted Answer

A)   rate of change in total fixed cost that results from producing one more unit of output.
B)   change in total cost that results from producing one more unit of output.
C)   change in average variable cost that results from producing one more unit of output.
D)   change in average total cost that results from producing one more unit of output.

Question 6

Average fixed costs diminish continuously as output increases.

Accepted Answer

A) True 
 B)False

Question 7

The first,second,and third workers employed by a firm add 24,18,and 9 units to total product respectively.Therefore,we can conclude that:

Accepted Answer

A)   marginal product of the third worker is 9.
B)   the third worker has to work with poorer-quality tools and raw materials.
C)   the firm will not want to hire more than three workers.
D)   the first worker puts forth more effort than the second and third workers.

Question 8

(Last Word) The development of additive manufacturing technology (3-D printers) is expected to lower prices by doing which of the following?

Accepted Answer

A)   Reducing the cost of producing blueprints for manufactured goods.
B)   Promoting greater economies of scale in manufacturing.
C)   Reducing the demand for manufactured goods.
D)   Reducing both large fixed set-up costs and transportation costs.

Question 9

Which of the following is most likely to be a variable cost?

Accepted Answer

A)   Fuel and power payments.
B)   Interest on business loans.
C)   Rental payments on IBM equipment.
D)   Real estate taxes.

Question 10

If a firm wanted to know how much it would save by producing one less unit of output,it would look to:

Accepted Answer

A)   MC.
B)   ATC.
C)   AVC.
D)   AFC.

Question 11

Economic profits are calculated by subtracting:

Accepted Answer

A)   explicit costs from total revenue.
B)   implicit costs from total revenue.
C)   implicit costs from normal profits.
D)   explicit and implicit costs from total revenue.

Question 12

Which of the following is not a source of economies of scale?

Accepted Answer

A)   Learning-by-doing.
B)   Labor specialization.
C)   Use of larger machines.
D)   Inelastic resource supply curves.

Question 13

Production costs to an economist:

Accepted Answer

A)   consist only of explicit costs.
B)   reflect opportunity costs.
C)   never reflect monetary outlays.
D)   always reflect monetary outlays.

Question 14

As output increases,total variable cost:

Accepted Answer

A)   increases more rapidly than does total cost.
B)   increases continuously at a decreasing rate.
C)   increases at a decreasing rate and then at an increasing rate.
D)   increases at a constant rate.

Question 15

Assume a firm closes down in the short run and produces no output.Under these conditions:

Accepted Answer

A)   TVC is positive,but TFC and TC are zero.
B)   TFC is positive,but TVC and TC are zero.
C)   TFC and TC are positive,but TVC is zero.
D)   TFC,TVC,and TC will all be positive.

Question 16

Answer the question on the basis of the following cost data:   Total  Output  Cost 0$24133241348454561669\begin{array} { c c c } &&	ext { Total } \	ext { Output }&&	ext { Cost }\\hline0 & & \$ 24 \1 & & 33 \2 & & 41 \3 & & 48 \4 & & 54 \5 & & 61 \6 & & 69\end{array} Output 0123456​​ Total  Cost $24334148546169​​  Refer to the data.The average total cost of producing 3 units of output is:

Accepted Answer

A)   $14.
B)   $12.
C)   $13.50.
D)   $16.

Question 17

The following is cost information for the Creamy Crisp Donut Company: Entrepreneur's potential earnings as a salaried worker = $50,000
Annual lease on building = $22,000
Annual revenue from operations = $380,000
Payments to workers = $120,000
Utilities (electricity,water,disposal) costs = $8,000
Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000
Entrepreneur's forgone interest on personal funds used to finance the business = $6,000
Refer to the data.Creamy Crisp's total revenues exceed its total costs,including a normal profit,by:

Accepted Answer

A)   $150,000.
B)   $94,000.
C)   $80,000.
D)   $230,000.

Question 18

Economies of scale are indicated by:

Accepted Answer

A)   the rising segment of the average variable cost curve.
B)   the declining segment of the long-run average total cost curve.
C)   the difference between total revenue and total cost.
D)   a rising marginal cost curve.

Question 19

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:   Output  ATC 1$40227329431538\begin{array} { c r } 	ext { Output } & 	ext { ATC } \\hline 1 & \$ 40 \2 & 27 \3 & 29 \4 & 31 \5 & 38\end{array} Output 12345​ ATC $4027293138​​  Refer to the data.The total cost of producing 4 units of output is:

Accepted Answer

A)   $31.
B)   $87.
C)   $124.
D)   $137.

Question 20

Answer the question on the basis of the following information:   TFC = Total Fixed Cost Q= Quantity of Output  MC = Marginal Cost P= Product Price  TVC = Total Variable Cost \begin{array} { l l } 	ext { TFC = Total Fixed Cost } & Q = 	ext { Quantity of Output } \	ext { MC = Marginal Cost } & P = 	ext { Product Price } \	ext { TVC = Total Variable Cost } &\end{array} TFC = Total Fixed Cost  MC = Marginal Cost  TVC = Total Variable Cost ​Q= Quantity of Output P= Product Price ​  Refer to the information.Average fixed cost is:

Accepted Answer

A)    TVC - MC 	ext { TVC - MC } TVC - MC  
B)   MCQ\frac { M C } { Q }QMC​ 
C)    TFC Q\frac { 	ext { TFC } } { Q }Q TFC ​ 
D)   TVCQ\frac { \mathrm { TVC } } { Q }QTVC​

Exam 9: Businesses and the Cost of Production

Economic profits are calculated by subtracting:

Correct Answer
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The first,second,and third workers employed by a firm add 24,18,and 9 units to total product respectively.Therefore,we can conclude that:

Correct Answer
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If a firm wanted to know how much it would save by producing one less unit of output,it would look to:

Correct Answer
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Correct Answer
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As output increases,total variable cost:

Correct Answer
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Correct Answer
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The law of diminishing returns describes the:

Correct Answer
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(Last Word) The development of additive manufacturing technology (3-D printers) is expected to lower prices by doing which of the following?

Correct Answer
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The short run is a period of time during which all costs are fixed costs.

Correct Answer
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Production costs to an economist:

Correct Answer
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Which of the following is most likely to be a variable cost?

Correct Answer
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Economies of scale are indicated by:

Correct Answer
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Average fixed costs diminish continuously as output increases.

Correct Answer
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(Last Word) Which of the following is a predicted result of the increased use of additive manufacturing (using 3-D printers) ?

Correct Answer
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Correct Answer
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Correct Answer
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Assume a firm closes down in the short run and produces no output.Under these conditions:

Correct Answer
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Correct Answer
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Marginal cost is the:

Correct Answer
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Which of the following is not a source of economies of scale?

Correct Answer
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Exam 9: Businesses and the Cost of Production

Economic profits are calculated by subtracting:

Correct AnswerverifiedShow Answer

The first,second,and third workers employed by a firm add 24,18,and 9 units to total product respectively.Therefore,we can conclude that:

Correct AnswerverifiedShow Answer

If a firm wanted to know how much it would save by producing one less unit of output,it would look to:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

As output increases,total variable cost:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The law of diminishing returns describes the:

Correct AnswerverifiedShow Answer

(Last Word) The development of additive manufacturing technology (3-D printers) is expected to lower prices by doing which of the following?

Correct AnswerverifiedShow Answer

The short run is a period of time during which all costs are fixed costs.

Correct AnswerverifiedShow Answer

Production costs to an economist:

Correct AnswerverifiedShow Answer

Which of the following is most likely to be a variable cost?

Correct AnswerverifiedShow Answer

Economies of scale are indicated by:

Correct AnswerverifiedShow Answer

Average fixed costs diminish continuously as output increases.

Correct AnswerverifiedShow Answer

(Last Word) Which of the following is a predicted result of the increased use of additive manufacturing (using 3-D printers) ?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Assume a firm closes down in the short run and produces no output.Under these conditions:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Marginal cost is the:

Correct AnswerverifiedShow Answer

Which of the following is not a source of economies of scale?

Correct AnswerverifiedShow Answer

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