Question 1

Table 12-8
 
-Refer to Table 12-8.What is the shape of the marginal cost curve for this firm?

Accepted Answer

A)   constant
B)   upward-sloping
C)   downward-sloping
D)   U-shaped

Question 2

At what level of output will average variable cost equal average total cost?

Accepted Answer

A)   when marginal cost equals average total cost
B)   for all levels of output in which average variable cost is falling
C)   when marginal cost equals average variable cost
D)   There is no level of output where this occurs,as long as fixed costs are positive.

Question 3

Table 12-7
The Flying Elvis Copter Rides
 
-Refer to Table 12-7.What is the value of O?

Accepted Answer

A)   $40
B)   $140
C)   $360
D)   $410

Question 4

If long-run average total cost decreases as the quantity of output increases,the firm is experiencing

Accepted Answer

A)   economies of scale.
B)   diseconomies of scale.
C)   coordination problems arising from the large size of the firm.
D)   fixed costs greatly exceeding variable costs.

Question 5

In the long run,

Accepted Answer

A)   inputs that were fixed in the short run remain fixed.
B)   inputs that were fixed in the short run become variable.
C)   inputs that were variable in the short run become fixed.
D)   variable inputs are rarely used.

Question 6

Marginal costs are costs that do not vary with the quantity of output produced.

Accepted Answer

A) True 
 B)False

Question 7

Figure 12-10 1,ATC2,and ATC3 most likely correspond to three different A)  time horizons. B)  products. C)  firms. D)  factory sizes." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 12-10.The three average total cost curves on the diagram labeled ATC1,ATC2,and ATC3 most likely correspond to three different

Accepted Answer

A)   time horizons.
B)   products.
C)   firms.
D)   factory sizes.

Question 8

Accounting profit is equal to

Accepted Answer

A)   marginal revenue minus marginal cost.
B)   total revenue minus the explicit cost of producing goods and services.
C)   total revenue minus the opportunity cost of producing goods and services.
D)   average revenue minus the average cost of producing the last unit of a good or service.

Question 9

In some cases,specialization allows larger factories to produce goods at a lower average cost than smaller factories.

Accepted Answer

A) True 
 B)False

Question 10

Table 12-7
The Flying Elvis Copter Rides
 
-Refer to Table 12-7.What is the value of D?

Accepted Answer

A)   $25
B)   $50
C)   $100
D)   $200

Question 11

Figure 12-10 1 to Q2. B)  Q2 to Q4. C)  Q1 to Q3. D)  Q4 to Q5." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 12-10.The firm experiences constant returns to scale if it changes its level of output from

Accepted Answer

A)   Q1 to Q2.
B)   Q2 to Q4.
C)   Q1 to Q3.
D)   Q4 to Q5.

Question 12

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.

Question 13

In the long run Firm A incurs total costs of $1,200 when output is 30 units and $1,400 when output is 40 units.Firm A exhibits

Accepted Answer

A)   diseconomies of scale because total cost is rising as output rises.
B)   diseconomies of scale because average total cost is rising as output rises.
C)   economies of scale because total cost is rising as output rises.
D)   economies of scale because average total cost is falling as output rises.

Question 14

A student might describe information about the costs of production as

Accepted Answer

A)   exciting and fresh.
B)   unimportant for understanding market structure.
C)   dry and technical.
D)   vibrant and enthralling.

Question 15

Table 12-7
The Flying Elvis Copter Rides
 
-Refer to Table 12-7.What is the value of I?

Accepted Answer

A)   $110
B)   $120
C)   $220
D)   $270

Question 16

In the short run,a firm incurs fixed costs

Accepted Answer

A)   only if it incurs variable costs.
B)   only if it produces no output.
C)   only if it produces a positive quantity of output.
D)   whether it produces output or not.

Question 17

Variable cost divided by quantity produced is

Accepted Answer

A)   average total cost.
B)   marginal cost.
C)   profit.
D)   None of the above is correct.

Question 18

When marginal cost is rising,average variable cost

Accepted Answer

A)   must be rising.
B)   must be falling.
C)   must be constant.
D)   could be rising or falling.

Question 19

Figure 12-10 1 to Q2. B)  Q2 to Q3. C)  Q3 to Q4. D)  Q4 to Q5." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 12-10.The firm experiences economies of scale if it changes its level of output from

Accepted Answer

A)   Q1 to Q2.
B)   Q2 to Q3.
C)   Q3 to Q4.
D)   Q4 to Q5.

Question 20

The shape of the total-cost curve is inversely related to the shape of the production function.

Accepted Answer

A) True 
 B)False

Exam 12: The Costs of Production

A student might describe information about the costs of production as

Correct Answer
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Marginal costs are costs that do not vary with the quantity of output produced.

Correct Answer
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At what level of output will average variable cost equal average total cost?

Correct Answer
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When marginal cost is rising,average variable cost

Correct Answer
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In the long run Firm A incurs total costs of $1,200 when output is 30 units and $1,400 when output is 40 units.Firm A exhibits

Correct Answer
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Table 12-7 The Flying Elvis Copter Rides -Refer to Table 12-7.What is the value of O?

Correct Answer
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Accounting profit is equal to

Correct Answer
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Table 12-7 The Flying Elvis Copter Rides -Refer to Table 12-7.What is the value of D?

Correct Answer
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In the short run,a firm incurs fixed costs

Correct Answer
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Figure 12-10 -Refer to Figure 12-10.The firm experiences constant returns to scale if it changes its level of output from

Correct Answer
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The shape of the total-cost curve is inversely related to the shape of the production function.

Correct Answer
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Figure 12-10 -Refer to Figure 12-10.The firm experiences economies of scale if it changes its level of output from

Correct Answer
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Variable cost divided by quantity produced is

Correct Answer
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Table 12-8 -Refer to Table 12-8.What is the shape of the marginal cost curve for this firm?

Correct Answer
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Table 12-7 The Flying Elvis Copter Rides -Refer to Table 12-7.What is the value of I?

Correct Answer
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If long-run average total cost decreases as the quantity of output increases,the firm is experiencing

Correct Answer
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In the long run,

Correct Answer
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Figure 12-10 -Refer to Figure 12-10.The three average total cost curves on the diagram labeled ATC₁,ATC₂,and ATC₃ most likely correspond to three different

Correct Answer
verified

In some cases,specialization allows larger factories to produce goods at a lower average cost than smaller factories.

Correct Answer
verified

Exam 12: The Costs of Production

A student might describe information about the costs of production as

Correct AnswerverifiedShow Answer

Marginal costs are costs that do not vary with the quantity of output produced.

Correct AnswerverifiedShow Answer

At what level of output will average variable cost equal average total cost?

Correct AnswerverifiedShow Answer

When marginal cost is rising,average variable cost

Correct AnswerverifiedShow Answer

In the long run Firm A incurs total costs of $1,200 when output is 30 units and $1,400 when output is 40 units.Firm A exhibits

Correct AnswerverifiedShow Answer

Table 12-7 The Flying Elvis Copter Rides -Refer to Table 12-7.What is the value of O?

Correct AnswerverifiedShow Answer

Accounting profit is equal to

Correct AnswerverifiedShow Answer

Table 12-7 The Flying Elvis Copter Rides -Refer to Table 12-7.What is the value of D?

Correct AnswerverifiedShow Answer

In the short run,a firm incurs fixed costs

Correct AnswerverifiedShow Answer

Figure 12-10 -Refer to Figure 12-10.The firm experiences constant returns to scale if it changes its level of output from

Correct AnswerverifiedShow Answer

The shape of the total-cost curve is inversely related to the shape of the production function.

Correct AnswerverifiedShow Answer

Figure 12-10 -Refer to Figure 12-10.The firm experiences economies of scale if it changes its level of output from

Correct AnswerverifiedShow Answer

Variable cost divided by quantity produced is

Correct AnswerverifiedShow Answer

Table 12-8 -Refer to Table 12-8.What is the shape of the marginal cost curve for this firm?

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Table 12-7 The Flying Elvis Copter Rides -Refer to Table 12-7.What is the value of I?

Correct AnswerverifiedShow Answer

If long-run average total cost decreases as the quantity of output increases,the firm is experiencing

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In the long run,

Correct AnswerverifiedShow Answer

Figure 12-10 -Refer to Figure 12-10.The three average total cost curves on the diagram labeled ATC1,ATC2,and ATC3 most likely correspond to three different

Correct AnswerverifiedShow Answer

In some cases,specialization allows larger factories to produce goods at a lower average cost than smaller factories.

Correct AnswerverifiedShow Answer

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Figure 12-10 -Refer to Figure 12-10.The three average total cost curves on the diagram labeled ATC₁,ATC₂,and ATC₃ most likely correspond to three different

Correct Answer
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Correct Answer
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