Question 1

Define profit.

Accepted Answer

Profit = T...

Question 2

Since the 1980s, Wal-Mart stores have appeared in almost every community in America. Wal-Mart buys its goods in large quantities and, therefore, at cheaper prices. Wal-Mart also locates its stores where land prices are low, usually outside of the community business district. Many customers shop at Wal-Mart because of low prices. Local retailers, like the neighborhood drug store, often go out of business because they lose customers. This story demonstrates that

Accepted Answer

A)   consumers do not react to changing prices.
B)   there are diseconomies of scale in retail sales.
C)   there are economies of scale in retail sales.
D)   there are diminishing returns to producing and selling retail goods.E) None of the above
F) All of the above

Question 3

Economists in the field of industrial organization study how

Accepted Answer

A)   central banking policies affect financial markets.
B)   firms' demand for labor and individuals' supply of labor affect resource markets.
C)   firms' decisions about prices and quantities depend on market conditions.
D)   externalities and public goods affect the environment.E) C) and D)
F) B) and C)

Question 4

If the marginal cost of producing the tenth unit of output is $2.50, and if the average total cost of producing the tenth unit of output is $3, then at ten units of output, average total cost is rising.

Accepted Answer

A) True 
 B)False

Question 5

In his book, An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith credits economies of scale to

Accepted Answer

A)   competition.
B)   opportunity costs.
C)   specialization.
D)   incentives.E) B) and C)
F) A) and B)

Question 6

Stick Storage manufactures and sells computer flash drives. Last year it sold 2 million flash drives at a price of $10 each. For last year, the firm's

Accepted Answer

A)   accounting profit was $20 million.
B)   economic profit was $20 million.
C)   total revenue was $20 million.
D)   explicit costs was $20 million.E) A) and D)
F) A) and C)

Question 7

Diminishing marginal productivity implies decreasing total product.

Accepted Answer

A) True 
 B)False

Question 8

Table 13-3 
-Refer to Table 13-3. At which number of workers does diminishing marginal product begin?

Accepted Answer

A)   1
B)   2
C)   3
D)   4E) B) and D)
F) All of the above

Question 9

Describe how an accounting firm could experience economies of scale.

Accepted Answer

Specialization of labor can produce econ...

Question 10

Foregone investment opportunities are an example of

Accepted Answer

A)   an explicit cost.
B)   an implicit cost.
C)   revenues.
D)   profits.E) All of the above
F) B) and D)

Question 11

The most likely explanation for economies of scale is

Accepted Answer

A)   coordination problems.
B)   specialization of labor.
C)   increasing marginal cost.
D)   decreasing marginal cost.E) A) and B)
F) B) and D)

Question 12

Table 13-17
Consider the following table of long-run total cost for four different firms: 
-Refer to Table 13-17. Which firm has economies of scale and then diseconomies of scale as output increases from 1 to 7?

Accepted Answer

A)   Firm 1
B)   Firm 2
C)   Firm 3
D)   Firm 4E) A) and B)
F) None of the above

Question 13

Table 13-19 
-Refer to Table 13-19. What is the total output of five workers?

Accepted Answer

Total output of four workers =...

Question 14

Diseconomies of scale occur when a firm's

Accepted Answer

A)   marginal costs are constant as output increases.
B)   long-run average total costs are decreasing as output increases.
C)   long-run average total costs are increasing as output increases.
D)   marginal costs are equal to average total costs for all levels of output.E) A) and B)
F) B) and C)

Question 15

Table 13-4
Charles's Math Tutoring 
-Refer to Table 13-4. Suppose that Charles's math tutoring company has a fixed cost of $50 per month for his cell phone. Each worker costs Charles $60 per day. As output increases from 0 to 45 students, Charles's total cost curve

Accepted Answer

A)   increases but gets flatter.
B)   increases and gets steeper.
C)   decreases and gets flatter.
D)   decreases but gets steeper.E) A) and D)
F) None of the above

Question 16

Pete owns a shoe-shine business. Which of the following costs would be implicit costs?

Accepted Answer

A)   (i)  and (ii)  only
B)   (iv)  only
C)   (iii)  and (iv)  only
D)   (i) , (ii) , (iii) , and (iv) E) B) and C)
F) A) and B)

Question 17

How can the average-fixed-cost curve be declining when fixed cost is constant?

Accepted Answer

Although fixed cost is unchang...

Question 18

Scenario 13-11
Walter builds birdhouses. He spends $5 on the materials for each birdhouse. He can build one in 30 minutes. He is semi-retired but earns $8 per hour at the local hardware store. He can sell a birdhouse for $20 each.
-Refer to Scenario 13-11. The implicit cost for one birdhouse is

Accepted Answer

A)   $4.
B)   $5.
C)   $8.
D)   $9.E) A) and D)
F) B) and C)

Question 19

Average variable cost will decrease if .

Accepted Answer

marginal c...

Question 20

Average total cost and marginal cost express information that is already contained in a firm's total cost.

Accepted Answer

A) True 
 B)False

Exam 13: The Costs of Production

Table 13-3 -Refer to Table 13-3. At which number of workers does diminishing marginal product begin?

Correct Answer
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Correct Answer
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Foregone investment opportunities are an example of

Correct Answer
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Pete owns a shoe-shine business. Which of the following costs would be implicit costs?

Correct Answer
verified

In his book, An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith credits economies of scale to

Correct Answer
verified

Describe how an accounting firm could experience economies of scale.

Correct Answer
verified
Specialization of labor can produce econ...
View Answer

Diminishing marginal productivity implies decreasing total product.

Correct Answer
verified

The most likely explanation for economies of scale is

Correct Answer
verified

Diseconomies of scale occur when a firm's

Correct Answer
verified

Define profit.

Correct Answer
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Profit = T...
View Answer

Average variable cost will decrease if .

Correct Answer
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marginal c...
View Answer

How can the average-fixed-cost curve be declining when fixed cost is constant?

Correct Answer
verified
Although fixed cost is unchang...
View Answer

Economists in the field of industrial organization study how

Correct Answer
verified

Average total cost and marginal cost express information that is already contained in a firm's total cost.

Correct Answer
verified

Table 13-19 -Refer to Table 13-19. What is the total output of five workers?

Correct Answer
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Total output of four workers =...
View Answer

Table 13-17 Consider the following table of long-run total cost for four different firms: -Refer to Table 13-17. Which firm has economies of scale and then diseconomies of scale as output increases from 1 to 7?

Correct Answer
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Scenario 13-11 Walter builds birdhouses. He spends $5 on the materials for each birdhouse. He can build one in 30 minutes. He is semi-retired but earns $8 per hour at the local hardware store. He can sell a birdhouse for $20 each. -Refer to Scenario 13-11. The implicit cost for one birdhouse is

Correct Answer
verified

Stick Storage manufactures and sells computer flash drives. Last year it sold 2 million flash drives at a price of $10 each. For last year, the firm's

Correct Answer
verified

Table 13-4 Charles's Math Tutoring -Refer to Table 13-4. Suppose that Charles's math tutoring company has a fixed cost of $50 per month for his cell phone. Each worker costs Charles $60 per day. As output increases from 0 to 45 students, Charles's total cost curve

Correct Answer
verified

If the marginal cost of producing the tenth unit of output is $2.50, and if the average total cost of producing the tenth unit of output is $3, then at ten units of output, average total cost is rising.

Correct Answer
verified

Exam 13: The Costs of Production

Table 13-3 -Refer to Table 13-3. At which number of workers does diminishing marginal product begin?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Foregone investment opportunities are an example of

Correct AnswerverifiedShow Answer

Pete owns a shoe-shine business. Which of the following costs would be implicit costs?

Correct AnswerverifiedShow Answer

In his book, An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith credits economies of scale to

Correct AnswerverifiedShow Answer

Describe how an accounting firm could experience economies of scale.

Correct AnswerverifiedSpecialization of labor can produce econ...View AnswerShow Answer

Diminishing marginal productivity implies decreasing total product.

Correct AnswerverifiedShow Answer

The most likely explanation for economies of scale is

Correct AnswerverifiedShow Answer

Diseconomies of scale occur when a firm's

Correct AnswerverifiedShow Answer

Define profit.

Correct AnswerverifiedProfit = T...View AnswerShow Answer

Average variable cost will decrease if .

Correct Answerverifiedmarginal c...View AnswerShow Answer

How can the average-fixed-cost curve be declining when fixed cost is constant?

Correct AnswerverifiedAlthough fixed cost is unchang...View AnswerShow Answer

Economists in the field of industrial organization study how

Correct AnswerverifiedShow Answer

Average total cost and marginal cost express information that is already contained in a firm's total cost.

Correct AnswerverifiedShow Answer

Table 13-19 -Refer to Table 13-19. What is the total output of five workers?

Correct AnswerverifiedTotal output of four workers =...View AnswerShow Answer

Table 13-17 Consider the following table of long-run total cost for four different firms: -Refer to Table 13-17. Which firm has economies of scale and then diseconomies of scale as output increases from 1 to 7?

Correct AnswerverifiedShow Answer

Scenario 13-11 Walter builds birdhouses. He spends $5 on the materials for each birdhouse. He can build one in 30 minutes. He is semi-retired but earns $8 per hour at the local hardware store. He can sell a birdhouse for $20 each. -Refer to Scenario 13-11. The implicit cost for one birdhouse is

Correct AnswerverifiedShow Answer

Stick Storage manufactures and sells computer flash drives. Last year it sold 2 million flash drives at a price of $10 each. For last year, the firm's

Correct AnswerverifiedShow Answer

Table 13-4 Charles's Math Tutoring -Refer to Table 13-4. Suppose that Charles's math tutoring company has a fixed cost of $50 per month for his cell phone. Each worker costs Charles $60 per day. As output increases from 0 to 45 students, Charles's total cost curve

Correct AnswerverifiedShow Answer

If the marginal cost of producing the tenth unit of output is $2.50, and if the average total cost of producing the tenth unit of output is $3, then at ten units of output, average total cost is rising.

Correct AnswerverifiedShow Answer

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Specialization of labor can produce econ...
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Profit = T...
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marginal c...
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Although fixed cost is unchang...
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Correct Answer
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Total output of four workers =...
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