Exam 3 Ch. 13

if kelsey sells 300 glasses of lemonade at $0.50 each, her total revenues are a. 150 b. 299.50 c. 300 d. 600

a. $150

kirsten sells 300 glasses of lemonade at $0.50 each. her toal costs are $125. her profits are a. 25 b. 124.50 c. 125 d. 150

a. $25

marginal cost equals (i) change in total cost divided by change in quantity produced (ii) change in variable cost divided by change in quantity produced (iii) the average fixed cost of the current unit a. (i) and (ii) only b. (ii) and (iii) only c. (i) only d. (i), (ii), and (iii)

a. (i) and (ii) only -> change in total cost divided by change in quantity produced. change in variable cost divided by change in quantity produced.

which of the following would be an example of an implicit cost? (i) forgone investment opportunities (ii) wages of workers (iii) raw materials costs a. (i) only b. (ii) only c. (ii) and (iii) only d. (i) and (iii) only

a. (i) only -> forgone investment opportunities

# workers: output: 0 0 1 20 2 45 3 60 4 70 what is the marginal product of the third worker? a. 15 b. 20 c. 35 d. 60

a. 15

# workers: total output: marginal product: 0 0 -- 1 30 2 40 3 50 4 40 5 30 what is total output when 1 worker is hired? a. 30 b. 40 c. 120 d. 160

a. 30

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

a. accounting profit = economic profit + implicit costs

which of the following expressions is correct? a. accounting profit = total revenue- explicit costs b. economic profit= total revenue - implicit costs c. economic profit = total revenue - explicit costs d. both a and b are correct

a. accounting profit = total revenue - explicit costs

implicit costs a. do not require an outlay of money by the firm b. do not enter into the economist's measure of a firm's profit c. are also known as variable costs d. are not part of an economist's measurement of opportunity cost

a. do not require outlay of money by the firm

the cost of producing an additional unit of output is the firm's a. marginal cost b. productivity offset c. variable cost d. average variable cost

a. marginal cost

explicit costs a. require an outlay of money by the firm b. include all of the firm's opportunity costs c. include income that is forgone by the firm's owners d. both b and c are correct

a. require an outlay of money by the firm

at all levels of production higher than the point where the marginal cost curve crosses the average variable cost curve, average variable cost a. rises b. remains unaffected c. falls d. all of the above are possible depending on the shape of the marginal cost curve

a. rises

quantity of gigaplots: VC: TC: 1 $13. $38 2 28 3 70 4 64 5 110 6 108 7 133 8 185 what is the marginal cost of the 2nd gigaplot? a. 14 b. 15 c. 28 d. 34

b. $15

quantity of gigaplots: VC: TC: 1 $13. $38 2 28 3 70 4 64 5 110 6 108 7 133 8 185 what is the marginal cost of the 8th gigaplot? a. 20 b. 27 c. 160 d. 185

b. $27

quantity of gigaplots: VC: TC: 1 $13. $38 2 28 3 70 4 64 5 110 6 108 7 133 8 185 what is the average fixed cost of producing 8 gigaplots at Jimmy's Gigaplot factory? a. 2.12 b. 3.13 c. 20.00 d. 24.37

b. $3.13

# workers: # machines: output: 1 2 5 2 2 10 3 2 20 4 2 35 5 2 55 6 2 70 7 2 80 each worker at Gallo's cork factory costs $12 per hour. The cost of each machine is $20 per day regardless of the number of corks produced. assume the number of machines does not change. If Gallo's produces at a rate of 78 corks per hour, what is the total machine cost per day? a. 20 b. 40 c. 240 d. we are unable to determine total machine costs from the information given

b. $40

Farmer Jack is a watermelon farmer. If Jack plants no seeds on his farm, he gets no harvest. If he plants 1 bag of seeds, he gets 30 watermelons. If he plants 2 bags of seeds, he gets 50 watermelons. If he plants 3 bags of seeds he gets 60 watermelons. A bag of seeds costs $100, and the cost of seeds are his only costs. (i) Farmer Jack experiences decreasing marginal product (ii) Farmer Jack's production function is nonlinear (iii) Farmer Jack's total cost curve is linear a. (i) only b. (i) and (ii) only c. (ii) only d. (i) and (iii) only

b. (i) and (ii) only -> Farmer Jack experiences decreasing marginal product and Farmer Jack's production function is nonlinear

Farmer Jack is a watermelon farmer. If Jack plants no seeds on his farm, he gets no harvest. If he plants 1 bag of seeds, he gets 30 watermelons. If he plants 2 bags of seeds, he gets 50 watermelons. If he plants 3 bags of seeds he gets 60 watermelons. A bag of seeds costs $100, and the cost of seeds are his only costs. which of the following statements is(are) true of Farmer Jack's marginal cost? (i) his marginal cost curve is U-shaped (ii) his marginal costs decreases with increased watermelon output (iii) his marginal cost reflects diminishing marginal product a. (ii) only b. (iii) only c. (i) and (iii) only d. (i) and (ii) only

b. (iii) only -> his marginal cost reflects diminishing marginal product

# workers: # machines: output: 1 2 5 2 2 10 3 2 20 4 2 35 5 2 55 6 2 70 7 2 80 assume Gallo's currently employs 2 workers. what is the marginal product of labor when Gallo's adds a 3rd worker? a. 5 cork per hour b. 10 cork per hour c. 20 cork per hour d. 25 cork per hour

b. 10 cork per hour

quantity of gigaplots: VC: TC: 1 $13. $38 2 28 3 70 4 64 5 110 6 108 7 133 8 185 what is the average variable cost of producing 3 gigaplots at Jimmy's Gigaplot factory? a. 14 b. 15 c. 16 d. 17

b. 15

the Wacky Widget company has total fixed costs of $100,000 per year. the firm's average variable cost is $5 for 10,000 widgets. at that level of output, the firm's average total costs equal a. 10 b. 15 c. 100 d. 150

b. 15

quantity of gigaplots: VC: TC: 1 $13. $38 2 28 3 70 4 64 5 110 6 108 7 133 8 185 what is the total cost of producing 2 gigaplots at Jimmy's Gigaplot factory? a. 48 b. 53 c. 58 d. 62

b. 53

quantity of gigaplots: VC: TC: 1 $13. $38 2 28 3 70 4 64 5 110 6 108 7 133 8 185 what is the variable cost of producing 5 gigplots at Jimmy's Gigaplot factory? a. 64 b. 85 c. 90 d. 100

b. 85

which of the following expressions is correct? a. marginal cost = (change in quantity of output) / (change in total cost) b. average total cost = (total cost) / (quantity of output) c. total cost = variable cost + marginal cost d. average variable cost = (quantity of output) / (total variable cost)

b. average total cost = (total cost) / (quantity of output)

at Bert's Bootery, the total cost of producing twenty paris 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

b. average total cost of 21 pairs of boots is $23

in the long run Firm A incurs total costs of $900 when output is 30 units and $1.200 when output is 40 units. Firm A exhibits a. diseconomies of scale because total cost is rising as output rises b. constant returns to scale because average total cost is constant as output rises c. diseconomies of scale because average total cost is rising as output rises d. economies of scale because average total cost is falling as output rises

b. constant returns to scale because average total cost is constant as output rises

total revenue minus both explicit and implicit costs is called a. accounting profit b. economic profit c. average total cost d. non of the above is correct

b. economic profit

a production function describes a. how a firm maximizes profits b. how a firm turns inputs into output c. the minimal cost of producing a given level of output d. the relationship between cost and output

b. how a firm turns inputs into outputs

in the long run 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

b. inputs that were fixed in the short run become variable

if marginal cost is below average total cost, then average total cost a. is constant b. is falling c. is rising d. may rise or fall depending on the size of fixed costs

b. is falling

economies of scale occur when a. long-run average total costs rise as output increases b. long-run average total costs fall as output increases c. average fixed costs are falling d. average fixed costs are constant

b. long-run average total costs fall as output increases

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

b. the marginal cost curve intersects those curves

# workers: # machines: output: 1 2 5 2 2 10 3 2 20 4 2 35 5 2 55 6 2 70 7 2 80 each worker at Gallo's cork factory costs $12 per hour. The cost of each machine is $20 per day regardless of the number of corks produced. what is the total daily cost of producing at a rate of 55 units per hour if Gallo's operates 8 hours per day? a. 480 b. 576 c. 520 d. 616

c. $520

# workers: # machines: output: 1 2 5 2 2 10 3 2 20 4 2 35 5 2 55 6 2 70 7 2 80 each worker at Gallo's cork factory costs $12 per hour. The cost of each machine is $20 per day regardless of the number of corks produced. If Gallo's produces at a rate of 70 corks per hour and operates 8 hours per day, what is Gallo's total labor cost per day? a. 72 b. 112 c. 576 d. 616

c. $576

quantity of gigaplots: VC: TC: 1 $13. $38 2 28 3 70 4 64 5 110 6 108 7 133 8 185 what is the average variable cost of producing 6 gigaplots at Jimmy's? a. 16 b. 17 c. 18 d. 19

c. 18

quantity of gigaplots: VC: TC: 1 $13. $38 2 28 3 70 4 64 5 110 6 108 7 133 8 185 what is the fixed cost of production at Jimmy's Gigaplot factory? a. 12 b. 20 c. 25 d. 51

c. 25

output: input: 0 $40 10 60 20 90 30 130 40 180 50 240 what is the total fixed cost for this firm? a. 20 b. 30 c. 40 d. 50

c. 40

# workers: total output: marginal product: 0 0 -- 1 30 2 40 3 50 4 40 5 30 what is total output when 2 workers are hired a. 30 b. 40 c. 70 d. 120

c. 70

marginal cost is equal to a. TC / Q b. change ATC / Q c. change TC / change Q d. change Q / change TC

c. change TC / change Q

if the total cost curve gets steeper as output increases, the firm is experiencing a. diseconomies of scale b. economies of scale c. diminishing marginal product d. increasing marginal product

c. diminishing marginal product

which of the following statements is not correct? a. in the long run, there are no fixed costs b. marginal cost is independent of fixed costs c. economies of scale is a short-run concept d. diminishing marginal product explains increasing marginal cost

c. economies of scale is a short-run concept

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. explicit costs + implicit costs

an example of an explicit cost of production would be the a. cost of forgone labor earnings for an entrepreneur b. lost opportunity to invest in capital markets when the money is invested in one's business c. lease payments for the land on which a firm's factory stands d. both a and c are correct

c. lease payments for the land on which a firm's factory stands

diseconomies of scale occur when a. average fixed costs are falling b. average fixed costs are constant c. long-run average total costs rise as output increases d. long-run average total costs fall as output increases

c. long-run average total costs rise as output increases

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

d. variable cost

# workers: output: 0 0 1 20 2 45 3 60 4 70 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

c. third worker

the amount of money that a firm receives from the sale of its output is called a. total gross profit b. total net profit c. total revenue d. net revenue

c. total revenue

quantity of gigaplots: VC: TC: 1 $13. $38 2 28 3 70 4 64 5 110 6 108 7 133 8 185 whats the total cost of producing 2 gigaplots at Jimmy's? a. 14.00 b. 18.50 c. 22.50 d. 26.50

d. $26.50

tony is a wheat farmer, but he also spends part of his day teaching guitar lessons. due to the popularity of his local country western band, farmer tony has more students requesting lessons than he has time for if he is to also maintain his farming business. farmer tony charges $25 an hour for his guitar lessons. one spring day, he spends 10 hours in his fields planting $130 worth of seeds on his farm. he expects that the seeds he planted will yield $300 worth of wheat. what is the total opportunity cost of the day that farmer tony incurred for his spring day in the field planting wheat? a. 130 b. 250 c. 300 d. 380

d. $380

quantity of gigaplots: VC: TC: 1 $13. $38 2 28 3 70 4 64 5 110 6 108 7 133 8 185 whats the average fixed cost of producing 3 gigaplots? a. 1.67 b. 2.67 c. 5.33 d. 8.33

d. $8.33

quantity of gigaplots: VC: TC: 1 $13. $38 2 28 3 70 4 64 5 110 6 108 7 133 8 185 what is the total cost of producing 7 gigaplots at Jimmy's Gigaplot factory? a. 140 b. 150 c. 153 d. 158

d. 158

quantity of gigaplots: VC: TC: 1 $13. $38 2 28 3 70 4 64 5 110 6 108 7 133 8 185 what is the variable cost of producing 8 gigaplots at Jimmy's Gigaplot factory? a. 120 b. 140 c. 155 d. 160

d. 160

# workers: output: 0 0 1 20 2 45 3 60 4 70 what is the marginal product of the second worker? a. 15 b. 20 c. 22.5 d. 25

d. 25

for a large firm that produces and sells automobiles, which of the following costs would be a variable cost? a. the unemployment insurance premium that the firm pays to the state of Missouri that is calculated based on the number of worker-hours that the firm uses b. the cost of the steel that is used in producing automobiles c. the cost of the electricity of running the machines on the factory floor d. all of the above are correct

d. all of the above are correct

for a large firm that produces and sells automobiles, which of the following costs would be variable cost? a. the unemployment insurance premium that the firm pays to the state of Missouri that is calculated based on the number of worker-hours that the firm uses b. the cost of the steel that is used in producing automobiles c. the cost of the electricity of running the machines on the factory floor d. all of the above are correct

d. all of the above are correct

marginal cost is equal to average total cost when a. average variable cost is falling b. average fixed cost is rising c. marginal cost is at its minimum d. average total cost is as its minimum

d. average total cost is at its minimum

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 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

d. economies of scale because average total cost is falling as output rises

the marginal product of any input is the a. increase in total cost associated with a one-unit increase in production b. change in total output associated with a $1.00 increase in total cost c. increase in total cost resulting from the hiring of an additional worker d. increase in total output obtained from one additional unit of that input

d. increase in total output obtained from one additional unit of that input

average total cost is increasing whenever a. total cost is increasing b. marginal cost is increasing c. marginal cost is less than average total cost d. marginal cost is greater than average total cost

d. marginal cost is greater than average total cost

at what level of output will average variable cost equal average total cost? 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 output where this occurs, as long as fixed costs are positive

d. there is no level output where this occurs, as long as fixed costs are positive

average total cost is equal to a. output/total cost b. total cost - total quantity of output c. average variable cost + total fixed cost d. total cost / output

d. total cost / output

in the short run, a firm incurs fixed costs 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

d. whether it produces output or not