Exam 3
Refer to figure 13-5. Which one of these curves is most likely to represent average variable cost? A) C B) A C) D D) B
A
Refer to table 13-1. The marginal cost of producing the sixth widget is A) $6.00 B) $5.00 C) $1.00 D) $3.50
A
Economies of scale arise when A) individuals in a society are self-sufficient B) workers are able to specialize in a particular task C) an economy is self-sufficient in production D) fixed costs are large relative to variable costs
B
Refer to table 13-1. The average fixed cost of producing five widgets is A) $1.00 B) $2.00 C) $3.00 D) none of the above are correct
B
The amount of money that a firm receives from the sale of its output is called A) total net profit B) total revenue C) total gross profit D) net revenue
B
Which of the following costs do not vary with the amount of output a firm produces? A) fixed costs and average fixed costs B) fixed cost C) average fixed cost D) marginal costs and average fixed costs
B
Average total cost is equal to A) total cost - total quantity of output B) output/total cost C) total cost/output D) average variable cost + total fixed cost
C
Economic profit is equal to A) average revenue minus the average cost of producing that last unit of a good or service 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) total revenue minus the accounting cost of producing goods and services
C
In the long run, A) variable inputs are rarely used B) inputs that were fixed in the short run remain fixed C) inputs that were fixed in the short run become variable D) inputs that were variable in the short run become fixed
C
Refer to figure 13-7. At all levels of output below M the firm experiences A) accounting profit B) diseconomies of scale C) economies of scale D) economic profit
C
Refer to figure 13-7. Which of the curves is most likely to characterize the short-run average total cost curve of the smallest factory? A) ATCc B) ATCb C) ATCa D) ATCd
C
The amount by which total cost rises when the firm produces one additional unit of output is called A) average cost B) fixed cost C) marginal cost D) variable cost
C
When adding another unit of labor leads to an increase in output that is smaller than increases in output that resulted from adding previous units of labor, we have the property of A) diminishing labor B) negative marginal product C) diminishing marginal product D) diminishing output
C
Average total cost is increasing whenever A) total cost is increasing B) marginal cost is less than average total cost C) marginal cost is increasing D) marginal cost is greater than average total cost
D
If marginal cost is below average total cost, then average total cost A) is rising B) is constant C) may rise or fall depending on the size of fixed costs D) is falling
D
Refer to figure 13-2. The changing slope of the total cost curve reflects A) decreasing average total cost B) increasing fixed cost C) decreasing average variable cost D) decreasing marginal product
D
Refer to figure 13-5. Which one of these curves is most likely to represent average total cost? A) C B) D C) A D) B
D
Refer to figure 13-5. Which one of these curves is most likely to represent marginal cost? A) C B) B C) D D) A
D
Refer to figure 13-7. Which curve represents the long-run average total cost? A) ATCa B) ATCb C) ATCc D) ATCd
D
Refer to table 13-1. The average total cost of producing one widget is A) $10.00 B) $1.00 C) $22.00 D) $11.00
D
Refer to table 13-1. The average variable cost of producing four widgets is A) $3.33 B) $2.00 C) $5.00 D) $2.50
D
The efficient scale of the firm is the quantity of output that A) maximizes marginal product B) maximizes profit C) minimizes average variable cost D) minimizes average total cost
D
The marginal product of labor can be defined as A) change in labor/change in total cost B) change in labor/change in output C) change in profit/change in labor D) change in output/change in labor
D
Those things that must be forgone to acquire a good are called A) explicit costs B) substitutes C) competitors D) opportunity costs
D
variable cost divided by quantity produced is A) average total cost B) marginal cost C) profit D) none of the above are correct
D
average total cost reveals how much total cost will change as the firm alters its level of production
F
diminishing marginal product exists when the total cost curve becomes flatter as outputs increases
F
diseconomies of scale often arise because higher production levels allow specialization among workers
F
economists normally assume that people start their own businesses to help society maximize its income
F
fixed costs are those costs that remain fixed no matter how long the time horizon is
F
if the marginal cost curve is rising, so is the average total cost curve
F
the average total cost curve is unaffected by diminishing marginal product
F
the shape of the total cost curve is unrelated to the shape of the production function
F
when economists speak of a firm's costs, they are usually excluding the opportunity costs
F
as a firm moves along its long-run average cost curve, it is adjusting the size of its factory to the quantity of production
T
assume Jack received all A's in his classes last semester. if Jack gets all C's in his classes this semester, his GPA may or may not fall
T
average total cost and marginal cost are merely ways to express information that is already contained in a firm's total cost
T
average variable cost is equal to total variable cost divided by quantity of output
T
because of the greater flexibility that firms have in the long run, all short-run cost curves lie on or above the long-run curve
T
fixed costs are incurred even when a firm does not produce anything
T
implicit costs are costs that do not require an outlay of money by the firm
T
in some cases, specialization allows larger factories to produce goods at a lower average cost than smaller factories
T
the cost of producing an additional unit of a good is not the same as the average cost of the good
T
the marginal cost curve intersects the average total cost curve at the minimum point of the average total cost curve
T
the shape of the marginal cost curve tells a producer something about the marginal product of her workers
T
the use of specialization to achieve economies of scale is one reason modern societies are as prosperous as they are
T
variable costs usually change as the firm alters the quantity of output produced
T
when average total cost rises if a producer either increases or decreases production, then the firm is said to be operating at efficient scale
T
when trying to understand the decision making process of different firms, economists assume that people think at the margin
T
accountants often ignore implicit costs
T
