Question 1

Graph 13-4
 B, what options does it have if it wants to change its level of automobile production over the next couple of weeks? A)  The firm has no options. It cannot change output level in the short run. B)  it can operate at any level of output between points M and N C)  it can operate at any level of output, as long as it stays on ATCD D)  it can operate at any level of output as long as it stays on ATCB" class="answers-bank-image d-inline" rel="preload" > This graph depicts average total cost functions for a firm that produces automobiles. Use the graph to answer the following question(s) .
-Refer to Graph 13-4. If the firm is currently operating on ATCB, what options does it have if it wants to change its level of automobile production over the next couple of weeks?

Accepted Answer

A)   The firm has no options. It cannot change output level in the short run.
B)   it can operate at any level of output between points M and N
C)   it can operate at any level of output, as long as it stays on ATCD
D)   it can operate at any level of output as long as it stays on ATCB

Question 2

Constant returns to scale occur when:

Accepted Answer

A)   long-run average total costs are constant as output increases
B)   marginal product of labour is falling
C)   the firm's long-run average cost curve is falling as output increases
D)   the firm's long-run average cost curve is rising as output increases

Question 3

Graph 13-2
  This graph depicts a total cost function for a firm that produces cookies. Use the graph to answer the following question(s) .
-Refer to Graph 13-2. The changing slope of the total cost curve reflects:

Accepted Answer

A)   decreasing average cost
B)   increasing marginal product
C)   decreasing marginal product
D)   increasing fixed cost

Question 4

Diminishing marginal product of labour is NOT likely to be observed when:

Accepted Answer

A)   experienced workers in labour teams help train new staff
B)   there is high demand for workers in the industry
C)   more workers allows people to specialise in one task
D)   new workers have to use the oldest technology in a plant

Question 5

A key difference between accountants and economists is their different treatment of the cost of capital. Does this cause an accountant's estimate of total costs to be higher or lower than an economist's estimate? Explain.

Accepted Answer

An accountant would not include the forg...

Question 6

Graph 13-3
  The set of curves above reflect information about the cost structure of a firm. Use this graph to answer the following question(s) .
-Refer to Graph 13-3. Which of the curves is most likely to represent marginal cost?

Accepted Answer

A)   A
B)   B
C)   C
D)   D

Question 7

Economists normally assume that the goal of a firm is to maximise revenue.

Accepted Answer

A) True 
 B)False

Question 8

To an economist, the field of industrial organisation answers which of the following questions?

Accepted Answer

A)   How does the difference in the number of firms affect prices and efficiency of market outcomes?
B)   Why are consumers subject to the law of demand?
C)   Why do firms experience falling marginal product of labour?
D)   Why do firms consider production costs when determining product supply?

Question 9

Graph 13-4
  This graph depicts average total cost functions for a firm that produces automobiles. Use the graph to answer the following question(s) .
-Refer to Graph 13-4. At levels of output below point M, the firm experiences:

Accepted Answer

A)   economies of scale
B)   accounting profit
C)   economic profit
D)   diseconomies of scale

Question 10

Those things that must be forgone to acquire a good are called:

Accepted Answer

A)   competitors
B)   substitutes
C)   opportunity costs
D)   explicit costs

Question 11

Table 13-1
Measures of Cost for Splashy Cardboard Kayak Factory.
 
-Refer to Table 13-1. The marginal cost of producing the sixth kayak is:

Accepted Answer

A)   $15
B)   $7
C)   $25
D)   it can't be determined from the information given

Question 12

Average total cost equals:

Accepted Answer

A)   change in total costs / change in quantity produced
B)   (fixed costs + variable costs)  / change in quantity produced
C)   change in total costs / quantity produced
D)   (fixed costs + variable costs)  / quantity produced

Question 13

Accounting profit and economic profit are two ways to say the same thing.

Accepted Answer

A) True 
 B)False

Question 14

The marginal product of labour can be defined as (where  Δ\DeltaΔ  denotes 'change') :

Accepted Answer

A)    Δ\DeltaΔ output/ Δ\DeltaΔ labour
B)    Δ\DeltaΔ labour/ Δ\DeltaΔ 0output
C)    Δ\DeltaΔ profit/ Δ\DeltaΔ labour
D)    Δ\DeltaΔ labour/ Δ\DeltaΔ total cost

Question 15

Table 13-1
Measures of Cost for Splashy Cardboard Kayak Factory.
 
-Refer to Table 13-1. The average fixed cost of producing five kayaks is:

Accepted Answer

A)   $15
B)   $3
C)   $5
D)   none of the above

Question 16

Graph 13-4
 A B)  ATCB C)  ATCC D)  ATCD" class="answers-bank-image d-inline" rel="preload" > This graph depicts average total cost functions for a firm that produces automobiles. Use the graph to answer the following question(s) .
-Refer to Graph 13-4. Which curve represents the long-run average total cost?

Accepted Answer

A)   ATCA
B)   ATCB
C)   ATCC
D)   ATCD

Question 17

Graph 13-2
  This graph depicts a total cost function for a firm that produces cookies. Use the graph to answer the following question(s) .
-Refer to Graph 13-2. Which of the statements below best captures information about the underlying production function?

Accepted Answer

A)   output increases at a decreasing rate with additional units of input
B)   output increases at an increasing rate with additional units of input
C)   output decreases at a decreasing rate with additional units of input
D)   output decreases at an increasing rate with additional units of input

Question 18

The short run is defined as the period of time in which all factors of production are fixed.

Accepted Answer

A) True 
 B)False

Question 19

Diminishing marginal product suggests that:

Accepted Answer

A)   marginal cost is downward-sloping
B)   additional units of output are more expensive
C)   the firm is at full capacity
D)   all of the above are true

Question 20

Julia runs a home construction business and owns a variety of construction equipment. She normally uses her equipment to build and sell homes herself, however when times are tough she rents out the equipment to other builders. Which of the following should Julia not include when looking at the costs of building a new home:

Accepted Answer

A)   the rental income from leasing her construction equipment
B)   any wages she has to pay to her employees
C)   the purchase price of her construction equipment
D)   the salary she could earn working for another construction company

Exam 13: The Costs of Production

Correct Answer
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Diminishing marginal product of labour is NOT likely to be observed when:

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Economists normally assume that the goal of a firm is to maximise revenue.

Correct Answer
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Correct Answer
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The short run is defined as the period of time in which all factors of production are fixed.

Correct Answer
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Average total cost equals:

Correct Answer
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The marginal product of labour can be defined as (where $\Delta$ denotes 'change') :

Correct Answer
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Graph 13-3 The set of curves above reflect information about the cost structure of a firm. Use this graph to answer the following question(s) . -Refer to Graph 13-3. Which of the curves is most likely to represent marginal cost?

Correct Answer
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Constant returns to scale occur when:

Correct Answer
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Table 13-1 Measures of Cost for Splashy Cardboard Kayak Factory. -Refer to Table 13-1. The average fixed cost of producing five kayaks is:

Correct Answer
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Graph 13-2 This graph depicts a total cost function for a firm that produces cookies. Use the graph to answer the following question(s) . -Refer to Graph 13-2. Which of the statements below best captures information about the underlying production function?

Correct Answer
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Graph 13-2 This graph depicts a total cost function for a firm that produces cookies. Use the graph to answer the following question(s) . -Refer to Graph 13-2. The changing slope of the total cost curve reflects:

Correct Answer
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Table 13-1 Measures of Cost for Splashy Cardboard Kayak Factory. -Refer to Table 13-1. The marginal cost of producing the sixth kayak is:

Correct Answer
verified

Diminishing marginal product suggests that:

Correct Answer
verified

A key difference between accountants and economists is their different treatment of the cost of capital. Does this cause an accountant's estimate of total costs to be higher or lower than an economist's estimate? Explain.

Correct Answer
verified
An accountant would not include the forg...
View Answer

Accounting profit and economic profit are two ways to say the same thing.

Correct Answer
verified

Those things that must be forgone to acquire a good are called:

Correct Answer
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Graph 13-4 This graph depicts average total cost functions for a firm that produces automobiles. Use the graph to answer the following question(s) . -Refer to Graph 13-4. At levels of output below point M, the firm experiences:

Correct Answer
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To an economist, the field of industrial organisation answers which of the following questions?

Correct Answer
verified

Graph 13-4 This graph depicts average total cost functions for a firm that produces automobiles. Use the graph to answer the following question(s) . -Refer to Graph 13-4. Which curve represents the long-run average total cost?

Correct Answer
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Exam 13: The Costs of Production

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Diminishing marginal product of labour is NOT likely to be observed when:

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Economists normally assume that the goal of a firm is to maximise revenue.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The short run is defined as the period of time in which all factors of production are fixed.

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Average total cost equals:

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The marginal product of labour can be defined as (where Δ\DeltaΔ denotes 'change') :

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Graph 13-3 The set of curves above reflect information about the cost structure of a firm. Use this graph to answer the following question(s) . -Refer to Graph 13-3. Which of the curves is most likely to represent marginal cost?

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Constant returns to scale occur when:

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Table 13-1 Measures of Cost for Splashy Cardboard Kayak Factory. -Refer to Table 13-1. The average fixed cost of producing five kayaks is:

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Graph 13-2 This graph depicts a total cost function for a firm that produces cookies. Use the graph to answer the following question(s) . -Refer to Graph 13-2. Which of the statements below best captures information about the underlying production function?

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Graph 13-2 This graph depicts a total cost function for a firm that produces cookies. Use the graph to answer the following question(s) . -Refer to Graph 13-2. The changing slope of the total cost curve reflects:

Correct AnswerverifiedShow Answer

Table 13-1 Measures of Cost for Splashy Cardboard Kayak Factory. -Refer to Table 13-1. The marginal cost of producing the sixth kayak is:

Correct AnswerverifiedShow Answer

Diminishing marginal product suggests that:

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A key difference between accountants and economists is their different treatment of the cost of capital. Does this cause an accountant's estimate of total costs to be higher or lower than an economist's estimate? Explain.

Correct AnswerverifiedAn accountant would not include the forg...View AnswerShow Answer

Accounting profit and economic profit are two ways to say the same thing.

Correct AnswerverifiedShow Answer

Those things that must be forgone to acquire a good are called:

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Graph 13-4 This graph depicts average total cost functions for a firm that produces automobiles. Use the graph to answer the following question(s) . -Refer to Graph 13-4. At levels of output below point M, the firm experiences:

Correct AnswerverifiedShow Answer

To an economist, the field of industrial organisation answers which of the following questions?

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Graph 13-4 This graph depicts average total cost functions for a firm that produces automobiles. Use the graph to answer the following question(s) . -Refer to Graph 13-4. Which curve represents the long-run average total cost?

Correct AnswerverifiedShow Answer

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The marginal product of labour can be defined as (where $\Delta$ denotes 'change') :

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An accountant would not include the forg...
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