ECO part 6

C

QN=317 (17458) A difference between explicit and implicit costs is that a. explicit costs are greater than implicit costs. b. explicit costs do not require a direct monetary outlay by the firm, whereas implicit costs do. c. implicit costs do not require a direct monetary outlay by the firm, whereas explicit costs do. d. implicit costs are greater than explicit costs.

A

QN=318 (17461) Which of the following expressions is correct? a. accounting profit = economic profit + implicit costs b. accounting profit = total revenue - implicit costs c. economic profit = accounting profit + explicit costs d. economic profit = total revenue - implicit costs

B

QN=319 (17444) Which of the following costs would be regarded as an implicit cost? a. the cost of accounting services b. the opportunity cost of financial capital that has been invested in the business c. the cost of compliance with government regulation d. all costs that involve outlays of money by the firm

A

QN=320 (17448) Refer to Figure 13-9. The firm experiences economies of scale at which output levels? a. (i) output levels less than M b. (ii) output levels between M and N c. (iii) output levels greater than N d. All of (i), (ii), and (iii) are correct as long as the firm is operating in the long run.

B

QN=321 (17459) At Bert's Bootery, the total cost of producing twenty pairs of boots is $400. The marginal cost of producing the twenty-first pair of boots is $83. We can conclude that the a. average variable cost of 21 pairs of boots is $23. b. average total cost of 21 pairs of boots is $23. c. average total cost of 21 pairs of boots is $15.09. d. marginal cost of the 20th pair of boots is $20.

C

QN=322 (17439) Which of the following measures of cost is best described as "the cost of a typical unit of output if total cost is divided evenly over all the units produced?" a. average fixed cost b. average variable cost c. average total cost d. marginal cost

D

QN=323 (17467) Refer to Table 13-6. What is the marginal cost of producing the fifth unit of output? a. $4 b. $40 c. $50 d. $70

C

QN=324 (17432) Jane decides to open her own business and earns $50,000 in accounting profit the first year. When deciding to open her own business, she turned down three separate job offers with annual salaries of $30,000, $40,000, and $45,000. What is Jane's economic profit from running her own business? a. $-55,000 b. $-5,000 c. $5,000 d. $20,000

D

QN=325 (17440) Industrial organization is the study of how a. labor unions organize workers in industries. b. profitable firms are in organized industries. c. industries organize for political advantage. d. firms' decisions regarding prices and quantities depend on the market conditions they face.

A

QN=326 (17453) The long-run average total cost curve is always a. flatter than the short-run average total cost curve, but not necessarily horizontal. b. horizontal. c. falling as output increases. d. rising as output increases.

B

QN=327 (17449) At Bert's Bootery, the total cost of producing twenty pairs of boots is $400. The marginal cost of producing the twenty-first pair of boots is $83. We can conclude that the a. average variable cost of 21 pairs of boots is $23. b. average total cost of 21 pairs of boots is $23. c. average total cost of 21 pairs of boots is $15.09. d. marginal cost of the 20th pair of boots is $20.

A

QN=328 (17457) Implicit costs a. do not require an outlay of money by the firm. b. do not enter into the economist's measurement of a firm's profit. c. are also known as variable costs. d. are not part of an economist's measurement of opportunity cost.

B

QN=329 (17469) If a firm experiences constant returns to scale at all output levels, then its long-run average total cost curve would a. slope downward. b. be horizontal. c. slope upward. d. slope downward for low output levels and upward for high output levels.

D

QN=330 (17464) If a firm produces nothing, which of the following costs will be zero? a. total cost b. fixed cost c. opportunity cost d. variable cost

C

QN=331 (17438) John has decided to start his own lawn-mowing business. To purchase the mowers and the trailer to transport the mowers, John withdrew $1,000 from his savings account, which was earning 3% interest, and borrowed an additional $2,000 from the bank at an interest rate of 7%. What is John's annual opportunity cost of the financial capital that has been invested in the business? a. $30 b. $140 c. $170 d. $300

B

QN=332 (17460) Economic profit is equal to a. total revenue minus the explicit cost of producing goods and services. b. total revenue minus the opportunity cost of producing goods and services. c. total revenue minus the accounting cost of producing goods and services. d. average revenue minus the average cost of producing the last unit of a good or service.

C

QN=333 (17454) Profit is defined as total revenue a. plus total cost. b. times total cost. c. minus total cost. d. divided by total cost.

A

QN=334 (17450) Kirsten sells 300 glasses of lemonade at $0.50 each. Her total costs are $125. Her profits are a. $25. b. $124.50. c. $125. d. $150.

C

QN=335 (17456) An example of an opportunity cost that is also an implicit cost is a. (i) a lease payment. b. (ii) the cost of raw materials. c. (iii) the value of the business owner's time. d. All of (i), (ii), and (iii) are correct.

A

QN=336 (17443) When, for a firm, long-run average total cost decreases as the quantity of output increases, we have a situation of 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.

D

QN=337 (17445) Refer to Table 13-3. What is total output when 5 workers are hired? a. 70 b. 120 c. 160 d. 190

D

QN=338 (17428) Which of the following measures of cost is best described as "the increase in total cost that arises from an extra unit of production?" a. variable cost b. average variable cost c. average total cost d. marginal cost

A

QN=339 (17427) Larry's Lunchcart is a small street vendor business. If Larry makes 15 pretzels in his first hour of business and incurs a total cost of $16.50, his average total cost per pretzel is a. $1.10. b. $6.50. c. $15.00. d. $16.50.

B

QN=340 (17465) Charles's Car Wash has average variable costs of $2 and average total costs of $3 when it produces 100 units of output (car washes). The firm's total variable cost is a. $100. b. $200. c. $300. d. $500.

B

QN=341 (17434) Suppose that for a particular firm the only variable input into the production process is labor and that output equals zero when no workers are hired. In addition, suppose that when the firm hires 2 workers, the total cost of production is $100. When the firm hires 3 workers, the total cost of production is $120. In addition, assume that the variable cost per unit of labor is the same regardless of the number of units of labor that are hired. What is the firm's fixed cost? a. $40 b. $60 c. $80 d. $100

D

QN=342 (17446) Which of the following measures of cost is best described as "the increase in total cost that arises from an extra unit of production?" a. variable cost b. average variable cost c. average total cost d. marginal cost

A

QN=343 (17441) Scenario 13-4 For the following questions, assume that a given firm experiences decreasing marginal product of labor with the addition of each worker regardless of the current output level. Refer to Scenario 13-4. Average variable cost will be a. always rising. b. always falling. c. U-shaped. d. constant.

D

QN=344 (17463) Which of the following statements about a production function is correct for a firm that uses labor to produce output? a. (i) The production function depicts the relationship between the quantity of labor and the quantity of output. b. (ii) The slope of the production function measures marginal product. c. (iii) The slopes of the production function and the total cost curve are inversely related; if one is increasing, the other is decreasing. d. All of (i), (ii), and (iii) are correct.

A

QN=345 (17430) The firm's efficient scale is the quantity of output that minimizes a. average total cost. b. average fixed cost. c. average variable cost. d. marginal cost.

C

QN=346 (17435) Economists normally assume that the goal of a firm is to (i) sell as much of their product as possible. (ii) set the price of the product as high as possible. (iii) maximize profit. a. (i) and (ii) are true. b. (ii) and (iii) are true. c. only (iii) is true. d. (i) and (iii) are true.

B

QN=347 (17468) Refer to Table 13-6. What is the shape of the marginal cost curve for this firm? a. constant b. upward-sloping c. downward-sloping d. U-shaped

A

QN=348 (17437) XYZ corporation produced 300 units of output but sold only 275 of the units it produced and discarded the remaining 25 defected units. The average cost of production for each unit of output produced was $100. Each of the 275 units sold was sold for a price of $95. Total profit for the XYZ corporation would be a. -$3,875. b. $26,125. c. $28,500. d. $30,000.

A

QN=349 (17462) Refer to Figure 13-2. As the number of workers increases, a. (i) marginal product decreases. b. (ii) total output decreases. c. (iii) marginal product increases but at a decreasing rate. d. Both (i) and (ii) are correct.

C

QN=350 (17451) Refer to Table 13-1. Alyson's pet sitting service experiences diminishing marginal productivity with the addition of the a. first worker. b. second worker. c. third worker. d. fourth worker.

B

QN=351 (17436) Which field of economics studies how the number of firms affects the prices in a market and the efficiency of market outcomes? a. macro economics b. industrial organization c. labor economics d. monetary economics

D

QN=352 (17442) The curves below reflect information about the cost structure of a firm. Use the figure to answer the following questions Refer to Figure 13-5. Curve A is U-shaped because of a. diminishing marginal product. b. increasing marginal product. c. the fact that increasing marginal product follows decreasing marginal product. d. the fact that decreasing marginal product follows increasing marginal product.

B

QN=353 (17429) The minimum points of the average variable cost and average total cost curves occur where a. the marginal cost curve lies below the average variable cost and average total cost curves. b. the marginal cost curve intersects those curves. c. the average variable cost and average total cost curves intersect. d. the slope of total cost is the smallest.

C

QN=354 (17455) A firm's opportunity costs of production are equal to its a. explicit costs only. b. implicit costs only. c. explicit costs + implicit costs. d. explicit costs + implicit costs + total revenue.

C

QN=355 (17452) Suppose Jan started up a small lemonade stand business last month. Variable costs for Jan's lemonade stand now include the cost of a. (i) building the lemonade stand. b. (ii) hiring an artist to design a logo for her sign. c. (iii) lemons and sugar. d. All of (i), (ii), and (iii) are correct.

C

QN=356 (17466) Refer to Table 13-6. What is the average variable cost of producing 5 units of output? a. $4 b. $5 c. $40 d. $44

D

QN=357 (17447) The marginal cost curve crosses the average total cost curve at a. (i) the efficient scale. b. (ii) the minimum point on the average total cost curve. c. (iii) a point where the marginal cost curve is rising. d. All of (i), (ii), and (iii) are correct.

C

QN=358 (17495) Which of the following is not a characteristic of a perfectly competitive market? a. Firms are price takers. b. Firms can freely enter the market. c. Many firms have market power. d. Goods offered for sale are largely the same.

A

QN=359 (17509) In a competitive market, the actions of any single buyer or seller will a. have a negligible impact on the market price. b. have little effect on market equilibrium quantity but will affect market equilibrium price. c. affect marginal revenue and average revenue but not price. d. adversely affect the profitability of more than one firm in the market.

C

QN=360 (17479) For any competitive market, the supply curve is closely related to the a. preferences of consumers who purchase products in that market. b. income tax rates of consumers in that market. c. firms' costs of production in that market. d. interest rates on government bonds.

B

QN=361 (17492) As a general rule, when accountants calculate profit they account for explicit costs but usually ignore a. certain outlays of money by the firm. b. implicit costs. c. operating costs. d. fixed costs.

C

QN=362 (17515) When fixed costs are ignored because they are irrelevant to a business's production decision, they are called a. explicit costs. b. implicit costs. c. sunk costs. d. opportunity costs.

B

QN=363 (17517) Refer to Figure 14-9. If the market starts in equilibrium at point C in panel (b), a decrease in demand will ultimately lead to a. more firms in the industry but lower levels of output for each firm. b. fewer firms in the market. c. a new long-run equilibrium at point D in panel (b). d. lower prices once the new long-run equilibrium is reached.

B

QN=364 (17516) Which of the following statements best reflects the production decision of a profit-maximizing firm in a competitive market when price falls below the minimum of average variable cost? a. The firm will continue to produce to attempt to pay fixed costs. b. The firm will immediately stop production to minimize its losses. c. The firm will stop production as soon as it is able to pay its sunk costs. d. The firm will continue to produce in the short run but will likely exit the market in the long run.

D

QN=365 (17472) 3. Refer to Table 14-7. If the firm is currently producing 14 units, what would you advise the owners? a. decrease quantity to 13 units b. increase quantity to 17 units c. continue to operate at 14 units d. increase quantity to 16 units

B

QN=366 (17489) Which of the following statements regarding a competitive market is not correct? a. There are many buyers and many sellers in the market. b. Because of firm location or product differences, some firms can charge a higher price than other firms and still maintain their sales volume. c. Price and average revenue are equal. d. Price and marginal revenue are equal.

B

QN=367 (17508) In a perfectly competitive market, the market supply curve is a. the marginal cost curve above average total cost for a representative firm. b. the horizontal sum of all the individual firms' supply curves. c. the vertical sum of all the individual firms' supply curves. d. always a horizontal line.

B

QN=368 (17474) In a perfectly competitive market, the market supply curve is a. the marginal cost curve above average total cost for a representative firm. b. the horizontal sum of all the individual firms' supply curves. c. the vertical sum of all the individual firms' supply curves. d. always a horizontal line.

C

QN=369 (17504) Which of the following is not a characteristic of a competitive market? a. Buyers and sellers are price takers. b. Each firm sells a virtually identical product. c. Free entry is limited. d. Each firm chooses an output level that maximizes profits.

B

QN=370 (17487) A firm in a competitive market has the following cost structure: If the market price is $4, this firm will a. produce two units in the short run and exit in the long run. b. produce three units in the short run and exit in the long run. c. produce four units in the short run and exit in the long run. d. shut down in the short run and exit in the long run.

C

QN=371 (17478) 4. Refer to Figure 14-2. This is a competitive market. If the market price is $10, what is the firm's total cost? a. $15 b. $30 c. $35 d. $50

B

QN=313 (17395) One way to eliminate the Tragedy of the Commons is to a. increase law enforcement in public areas. b. limit access to the commons. c. increase access to the commons. d. decrease taxes.

C

QN=314 (17411) People have little incentive to produce a public good because a. the social benefit is less than the private benefit. b. the social benefit is less than the social cost. c. there is a free-rider problem. d. there is a Tragedy of the Commons.

C

QN=315 (17431) Table 13-13 Consider the following table of long-run total cost for four different firms: Refer to Table 13-13. Which firm has diseconomies of scale over the entire range of output? a. Firm 1 b. Firm 2 c. Firm 3 d. Firm 4

C

QN=316 (17433) Refer to Table 13-2. The marginal product of the second worker is a. 90 units. b. 85 units. c. 80 units. d. 20 units.