Question 1

NARRBEGIN: Exhibit 7-5
Exhibit 7-5
 
-In Exhibit 7-5, what is fixed cost at 15 units of output?

Accepted Answer

A)   $0
B)   $10
C)   $30
D)   it is impossible to calculate fixed cost unless we know the daily wage
E)   it is impossible to calculate fixed cost unless we know variable cost at Q = 0

Question 2

NARRBEGIN: Exhibit 7-4
Exhibit 7-4
 
-In Exhibit 7-4, marginal returns begin to diminish with the hiring of the __________ worker.

Accepted Answer

A)   second
B)   third
C)   fourth
D)   fifth
E)   sixth

Question 3

When marginal product is negative, the slope of the total product curve must be negative.

Accepted Answer

A) True 
 B)False

Question 4

For each size of plant a manufacturer could build, there is a different

Accepted Answer

A)   long-run average fixed cost curve
B)   long-run average variable cost curve
C)   short-run average total cost curve
D)   long-run average total cost curve
E)   long-run marginal cost curve

Question 5

NARRBEGIN: Exhibit 7-4
Exhibit 7-4
 
-In Exhibit 7-4, marginal returns increase with the hiring of up to __________ worker(s) .

Accepted Answer

A)   one
B)   two
C)   three
D)   four
E)   five

Question 6

Which of the following is true of the MC curve?

Accepted Answer

A)   It intersects the ATC curve at its minimum, but it does not intersect the AVC curve at its minimum.
B)   It intersects the AVC curve at its minimum, but it does not intersect the ATC curve at its minimum.
C)   It intersects both the ATC and the AVC curves at their minimums.
D)   It intersects both the ATC and the AFC curves at their minimums.
E)   It intersects both the AVC and the AFC curves at their minimums.

Question 7

Which of the following is a fixed cost for Wendy's Hamburgers?

Accepted Answer

A)   the cost of beef
B)   electricity to light up the Wendy's sign
C)   gasoline for the trucks that deliver supplies to the various franchises
D)   interest on funds borrowed to build new facilities
E)   expenditures on paper and plastic for packaging

Question 8

Unlike implicit costs, explicit costs

Accepted Answer

A)   reflect opportunity costs
B)   include the value of the owner's time
C)   are not included in a firm's accounting statements
D)   are actual cash payments
E)   do not change as a firm's output changes

Question 9

If variable cost rises from $60 to $100 as output increases from 15 to 20 units, the marginal cost of the twentieth unit

Accepted Answer

A)   is $100
B)   is $5
C)   is $40
D)   is $8
E)   cannot be determined without total cost

Question 10

What is true of marginal cost when marginal returns are increasing?

Accepted Answer

A)   It is negative and increasing.
B)   It is negative and decreasing.
C)   It is positive and increasing.
D)   It is positive and decreasing.
E)   It is positive and has a constant slope.

Question 11

Someone once said that Chevrolet is so large that if it shakes its tail, its takes two years for its head to notice it. This is an example of

Accepted Answer

A)   profit centers
B)   economies of scale
C)   diseconomies of scale
D)   diminishing marginal returns
E)   diminishing marginal cost

Question 12

Which of the following is a fixed cost of preparing meals?

Accepted Answer

A)   dishwasher detergent
B)   chicken
C)   salad
D)   a microwave oven
E)   electricity

Question 13

The shape of the long-run average cost curve reflects

Accepted Answer

A)   market demand
B)   economies and diseconomies of scale
C)   increasing and diminishing marginal returns
D)   productivity of fixed inputs
E)   all of the above

Question 14

If variable cost at each output level doubles,

Accepted Answer

A)   ATC doubles
B)   AFC doubles
C)   MC remains unchanged
D)   MC doubles
E)   MC less than doubles

Question 15

Fixed costs are defined as

Accepted Answer

A)   the total costs of a firm's production
B)   the additional cost of the last unit produced
C)   costs that increase proportionately as the quantity produced increases
D)   costs that do not vary as quantity produced increases
E)   implicit costs only

Question 16

When marginal cost is decreasing, total cost is rising.

Accepted Answer

A) True 
 B)False

Question 17

A young chef is considering opening his own sushi bar. To do so, he would have to quit his current job, which pays $20,000 a year, and take over a store building that he owns and currently rents to his brother for $6,000 a year. His expenses at the sushi bar would be $50,000 for food and $2,000 for gas and electricity. What are his implicit costs?

Accepted Answer

A)   $26,000
B)   $66,000
C)   $78,000
D)   $52,000
E)   $72,000

Question 18

NARRBEGIN: Exhibit 7-7
Exhibit 7-7
 
-Fixed cost in Exhibit 7-7 equals

Accepted Answer

A)   $20
B)   $30
C)   $50
D)   $280
E)   we cannot calculate fixed cost

Question 19

Economic profit is defined as total revenue

Accepted Answer

A)   plus total costs
B)   minus marginal costs
C)   minus variable costs
D)   minus total costs
E)   minus fixed costs

Question 20

If a firm experiencing "economies of scale" decreases its output, its long-run average cost will decrease.

Accepted Answer

A) True 
 B)False

Exam 7: Production and Cost in the Firm

NARRBEGIN: Exhibit 7-4 Exhibit 7-4 -In Exhibit 7-4, marginal returns increase with the hiring of up to __________ worker(s) .

Correct Answer
verified

If variable cost rises from $60 to $100 as output increases from 15 to 20 units, the marginal cost of the twentieth unit

Correct Answer
verified

What is true of marginal cost when marginal returns are increasing?

Correct Answer
verified

If variable cost at each output level doubles,

Correct Answer
verified

Fixed costs are defined as

Correct Answer
verified

NARRBEGIN: Exhibit 7-5 Exhibit 7-5 -In Exhibit 7-5, what is fixed cost at 15 units of output?

Correct Answer
verified

Economic profit is defined as total revenue

Correct Answer
verified

NARRBEGIN: Exhibit 7-4 Exhibit 7-4 -In Exhibit 7-4, marginal returns begin to diminish with the hiring of the __________ worker.

Correct Answer
verified

Which of the following is a fixed cost of preparing meals?

Correct Answer
verified

If a firm experiencing "economies of scale" decreases its output, its long-run average cost will decrease.

Correct Answer
verified

The shape of the long-run average cost curve reflects

Correct Answer
verified

Which of the following is true of the MC curve?

Correct Answer
verified

When marginal cost is decreasing, total cost is rising.

Correct Answer
verified

Unlike implicit costs, explicit costs

Correct Answer
verified

Correct Answer
verified

NARRBEGIN: Exhibit 7-7 Exhibit 7-7 -Fixed cost in Exhibit 7-7 equals

Correct Answer
verified

Which of the following is a fixed cost for Wendy's Hamburgers?

Correct Answer
verified

Someone once said that Chevrolet is so large that if it shakes its tail, its takes two years for its head to notice it. This is an example of

Correct Answer
verified

When marginal product is negative, the slope of the total product curve must be negative.

Correct Answer
verified

For each size of plant a manufacturer could build, there is a different

Correct Answer
verified

Exam 7: Production and Cost in the Firm

NARRBEGIN: Exhibit 7-4 Exhibit 7-4 -In Exhibit 7-4, marginal returns increase with the hiring of up to __________ worker(s) .

Correct AnswerverifiedShow Answer

If variable cost rises from $60 to $100 as output increases from 15 to 20 units, the marginal cost of the twentieth unit

Correct AnswerverifiedShow Answer

What is true of marginal cost when marginal returns are increasing?

Correct AnswerverifiedShow Answer

If variable cost at each output level doubles,

Correct AnswerverifiedShow Answer

Fixed costs are defined as

Correct AnswerverifiedShow Answer

NARRBEGIN: Exhibit 7-5 Exhibit 7-5 -In Exhibit 7-5, what is fixed cost at 15 units of output?

Correct AnswerverifiedShow Answer

Economic profit is defined as total revenue

Correct AnswerverifiedShow Answer

NARRBEGIN: Exhibit 7-4 Exhibit 7-4 -In Exhibit 7-4, marginal returns begin to diminish with the hiring of the __________ worker.

Correct AnswerverifiedShow Answer

Which of the following is a fixed cost of preparing meals?

Correct AnswerverifiedShow Answer

If a firm experiencing "economies of scale" decreases its output, its long-run average cost will decrease.

Correct AnswerverifiedShow Answer

The shape of the long-run average cost curve reflects

Correct AnswerverifiedShow Answer

Which of the following is true of the MC curve?

Correct AnswerverifiedShow Answer

When marginal cost is decreasing, total cost is rising.

Correct AnswerverifiedShow Answer

Unlike implicit costs, explicit costs

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

NARRBEGIN: Exhibit 7-7 Exhibit 7-7 -Fixed cost in Exhibit 7-7 equals

Correct AnswerverifiedShow Answer

Which of the following is a fixed cost for Wendy's Hamburgers?

Correct AnswerverifiedShow Answer

Someone once said that Chevrolet is so large that if it shakes its tail, its takes two years for its head to notice it. This is an example of

Correct AnswerverifiedShow Answer

When marginal product is negative, the slope of the total product curve must be negative.

Correct AnswerverifiedShow Answer

For each size of plant a manufacturer could build, there is a different

Correct AnswerverifiedShow Answer

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