ECON 2302_Chpt 13 MC Practice Test

Refer to Table 13-1. What is the variable cost of producing five widgets? a. $13.00 b. $14.00 c. $15.00 d. It can't be determined from the information given

$15.00

Economic profit a. will never exceed accounting profit. b. is most often equal to accounting profit. c. is always at least as large as accounting profit. d. is a less complete measure of profitability than accounting profit

will never exceed accounting profit

Refer to Table 13-1. What is the variable cost of producing zero widgets? a. $0 b. $1.00 c. $10.00 d. $10.00

$0

Refer to Table 13-1. What is the marginal cost of producing the first widget? a. $1.00 b. $10.00 c. $11.00 d. It can't be determined from the information given.

$1.00

Refer to Table 13-1. The average total cost of producing one widget is a. $1.00. b. $10.00. c. $11.00. d. $22.00.

$11.00

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

$2.00

Refer to Table 13-1. The average variable cost of producing four widgets is a. $2.00 b. $2.50 c. $3.33 d. $5.00

$2.50

Refer to Table 13-1. The marginal cost of producing the sixth widget is a. $1.00. b. $3.50. c. $5.00. d. $6.00.

$6.00

Economic profit is equal to (i) total revenue - (explicit costs + implicit costs). (ii) total revenue - opportunity costs. (iii) accounting profit + implicit costs. a. (i) only b. (i) and (ii) c. (ii) and (iii). d. All of the above are correct

(i) and (ii)

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) b. (ii) and (iii) c. (ii) only d. All of the above are correct

(i) and (ii)

Which of the following is an implicit cost? (i) the owner of a firm forgoing an opportunity to earn a large salary working for a Wall Street brokerage firm (ii) interest paid on the firm's debt (iii) rent paid by the firm to lease office space a. (ii) and (iii) b. (i) and (iii) c. (i) only d. All of the above are correct

(i) only

Accounting profit is equal to (i) total revenue - implicit costs. (ii) total revenue - opportunity costs. (iii) economic profit + implicit costs. a. (i) only b. (iii) only c. (i) and (ii) d. None of the above are correct.

(iii) only

Let L represent the number of workers hired by a firm and let Q represent that firm's quantity of output. Assume two points on the firm's production function are (L = 12, Q = 122) and (L = 13, Q = 130). Then the marginal product of the 13th worker is a. 8 units of output. b. 10 units of output. c. 122 units of output. d. 130 units of output

8 units of output

Which of these assumptions is often realistic for a firm in the short run? a. The firm can vary both the size of its factory and the number of workers it employs. b. The firm can vary the size of its factory, but not the number of workers it employs. c. The firm can vary the number of workers it employs, but not the size of its factory. d. The firm can vary neither the size of its factory nor the number of workers it employs

The firm can vary the number of workers it employs, but not the size of its factory

Marginal cost tells us the a. value of all resources used in a production process. b. marginal increment to profitability when price is constant. c. amount by which total cost rises when output is increased by one unit. d. amount by which output rises when labor is increased by one unit.

amount by which total cost rises when output is increased by one unit

The amount of money that a wheat farmer could have earned if he had planted barley instead of wheat is a. an explicit cost. b. an accounting cost c. an implicit cost. d. forgone accounting profit.

an implicit cost

Fixed costs can be defined as costs that a. vary inversely with production. b. vary in proportion with production. c. are incurred only when production is large enough. d. are incurred even if nothing is produced.

are incurred even if nothing is produced

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 at its minimum

average total cost is at its minimum

One would expect to observe diminishing marginal product of labor when a. crowded office space reduces the productivity of new workers. b. workers are discouraged about the lack of help from other workers. c. only new workers are trained in using the most productive capital. d. union workers are told to reduce their work effort in preparation for a new round of collective bargaining talks.

crowded office space reduces the productivity of new workers

The marginal product of labor is equal to the a. incremental cost associated with a one unit increase in labor. b. incremental profit associated with a one unit increase in labor. c. increase in labor necessary to generate a one unit increase in output. d. increase in output obtained from a one unit increase in labor

increase in output obtained from a one unit increase in labor

A production function is a relationship between a. inputs and quantity of output. b. inputs and revenue. c. inputs and costs. d. inputs and profit.

inputs and quantity of output

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.

inputs that were fixed in the short run become variable

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

long-run average total costs fall as output increases

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.

long-run average total costs rise as output increases

When a firm's only variable input is labor, then the slope of the production function measures the a. quantity of labor. b. quantity of output. c. total cost. d. marginal product of labor

marginal product of labor

Economists normally assume that the goal of a firm is to a. maximize its total revenue. b. maximize its profit. c. minimize its explicit costs. d. minimize its total cost.

maximize its profit

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. All of the above are correct.

require an outlay of money by the firm

John owns a shoe-shine business. His accountant most likely includes which of the following costs on his financial statements? a. wages John could earn washing windows b. dividends John's money was earning in the stock market before John sold his stock and bought a shoe-shine booth c. the cost of shoe polish d. All of the above are correct.

the cost of shoe polish

For a certain firm, the number of workers hired is the only variable input. When this firm's production function is illustrated on a graph, a. the number of workers is measured on the horizontal axis and the quantity of output is measured on the vertical axis. b. the number of workers is measured on the horizontal axis and variable cost is measured on the vertical axis. c. the number of workers is measured on the horizontal axis and profit is measured on the vertical axis. d. total cost is measured on the horizontal axis and the number of workers is measured on the vertical axis.

the number of workers is measured on the horizontal axis and the quantity of output is measured on the vertical axis

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.

total cost/output

Total revenue equals a. total output multiplied by price per unit of output. b. total output divided by profit. c. (total output multiplied by sales price) - inventory surplus. d. (total output multiplied by sales price) - inventory shortage

total output multiplied by price per unit of output

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.

total revenue