Question 1

Vanessa owns a horse ranch.Her total costs are $550,000 per year,and her fixed costs are $205,000 per year.This means that her variable costs are

Accepted Answer

A)   $550,000.
B)   $205,000.
C)   $345,000.
D)   $755,000.
E)   $108,000.

Question 2

A firm's economic profit is always less than its accounting profit because

Accepted Answer

A)   accounting profit considers explicit costs,which economic profit does not.
B)   economic profit considers implicit costs,which accounting profit does not.
C)   economic profit is always zero,no matter what kind of firm it is.
D)   accounting profit considers implicit costs,which economic profit does not.
E)   accounting profit is always positive,no matter what kind of firm it is.

Question 3

Which is the best example of diseconomies of scale?

Accepted Answer

A)   the local power company
B)   the pizza business
C)   the restaurant industry
D)   a parking garage
E)   a small family farm

Question 4

If a firm hires another worker and her marginal product of labor is positive,we know that the firm's total output is

Accepted Answer

A)   decreasing.
B)   unchanged.
C)   increasing.
D)   zero.
E)   equal to the marginal product of that worker.

Question 5

The three primary factors of production are

Accepted Answer

A)   revenue,profits,and costs.
B)   price,quantity,and profits.
C)   capital,interest,and savings.
D)   labor,wages,and training.
E)   land,labor,and capital.

Question 6

If a firm experiences diseconomies of scale,its long-run average cost curve is

Accepted Answer

A)   upward sloping.
B)   downward sloping.
C)   a vertical line.
D)   a horizontal line.
E)   U-shaped.

Question 7

Total revenue minus total cost is equal to

Accepted Answer

A)   producer surplus.
B)   dividends.
C)   consumer surplus.
D)   profit.
E)   retained earnings.

Question 8

Use the following graph to answer the following questions.
 
-If the firm expanded its scale of production and found that its average costs decreased,which of the curves would reflect this situation?

Accepted Answer

A)   LRATC2 and LRATC3
B)   LRATC2
C)   LRATC1
D)   LRATC3
E)   LRATC1 and LRATC2

Question 9

Refer to the following table.What is the average variable cost of producing three units of the good?

Accepted Answer

A)   $80
B)   $120
C)   $140
D)   $20
E)   $420

Question 10

In the short run,average total costs at first decrease and then increase as more output is produced because

Accepted Answer

A)   marginal cost is at first greater than average total costs,then falls below it.
B)   average fixed costs continually decrease.
C)   average variable costs at first decrease and then increase at the same level of output.
D)   total cost continually increases.
E)   marginal cost is at first less than average total costs,then rises above it.

Question 11

If a firm experiences diminishing marginal product of labor,its marginal cost

Accepted Answer

A)   increases at an increasing rate.
B)   decreases at a decreasing rate.
C)   increases at a constant rate.
D)   decreases at a constant rate.
E)   increases at a decreasing rate.

Question 12

If a firm experiences gains from specialization as it increases its scale of production,we would expect its long-run average cost curve to be

Accepted Answer

A)   upward sloping.
B)   horizontal.
C)   downward sloping.
D)   vertical.
E)   U-shaped.

Question 13

What happens when a firm adopts a new technology?

Accepted Answer

A)   The firm must increase its losses.
B)   The firm must increase its profit.
C)   The firm will have a new production function.
D)   The firm must have higher costs.
E)   The firm must have higher revenue.

Question 14

Which of the following statements is true?

Accepted Answer

A)   An implicit cost is monetary.
B)   An explicit cost is an opportunity cost.
C)   Economists consider all costs to be explicit costs.
D)   Implicit and explicit costs are always equal.
E)   Economists consider only some costs to be implicit costs.

Question 15

In the accompanying table,diminishing marginal product begins after the ________ unit of output.

Accepted Answer

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

Exam 8: Business Costs and Production

In the accompanying table,diminishing marginal product begins after the ________ unit of output.

Correct Answer
verified

Use the following graph to answer the following questions. -If the firm expanded its scale of production and found that its average costs decreased,which of the curves would reflect this situation?

Correct Answer
verified

The three primary factors of production are

Correct Answer
verified

If a firm experiences diminishing marginal product of labor,its marginal cost

Correct Answer
verified

Refer to the following table.What is the average variable cost of producing three units of the good?

Correct Answer
verified

Which is the best example of diseconomies of scale?

Correct Answer
verified

What happens when a firm adopts a new technology?

Correct Answer
verified

In the short run,average total costs at first decrease and then increase as more output is produced because

Correct Answer
verified

Vanessa owns a horse ranch.Her total costs are $550,000 per year,and her fixed costs are $205,000 per year.This means that her variable costs are

Correct Answer
verified

If a firm hires another worker and her marginal product of labor is positive,we know that the firm's total output is

Correct Answer
verified

If a firm experiences diseconomies of scale,its long-run average cost curve is

Correct Answer
verified

Total revenue minus total cost is equal to

Correct Answer
verified

Which of the following statements is true?

Correct Answer
verified

A firm's economic profit is always less than its accounting profit because

Correct Answer
verified

If a firm experiences gains from specialization as it increases its scale of production,we would expect its long-run average cost curve to be

Correct Answer
verified

Exam 8: Business Costs and Production

In the accompanying table,diminishing marginal product begins after the ________ unit of output.

Correct AnswerverifiedShow Answer

Use the following graph to answer the following questions. -If the firm expanded its scale of production and found that its average costs decreased,which of the curves would reflect this situation?

Correct AnswerverifiedShow Answer

The three primary factors of production are

Correct AnswerverifiedShow Answer

If a firm experiences diminishing marginal product of labor,its marginal cost

Correct AnswerverifiedShow Answer

Refer to the following table.What is the average variable cost of producing three units of the good?

Correct AnswerverifiedShow Answer

Which is the best example of diseconomies of scale?

Correct AnswerverifiedShow Answer

What happens when a firm adopts a new technology?

Correct AnswerverifiedShow Answer

In the short run,average total costs at first decrease and then increase as more output is produced because

Correct AnswerverifiedShow Answer

Vanessa owns a horse ranch.Her total costs are $550,000 per year,and her fixed costs are $205,000 per year.This means that her variable costs are

Correct AnswerverifiedShow Answer

If a firm hires another worker and her marginal product of labor is positive,we know that the firm's total output is

Correct AnswerverifiedShow Answer

If a firm experiences diseconomies of scale,its long-run average cost curve is

Correct AnswerverifiedShow Answer

Total revenue minus total cost is equal to

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

A firm's economic profit is always less than its accounting profit because

Correct AnswerverifiedShow Answer

If a firm experiences gains from specialization as it increases its scale of production,we would expect its long-run average cost curve to be

Correct AnswerverifiedShow Answer

Correct Answer
verified

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