Question 1

The difference between economic profit and accounting profit is that economic profit is calculated based on both implicit and explicit costs whereas accounting profit is calculated based on explicit costs only.

Accepted Answer

A) True 
 B)False

Question 2

Figure 13-1 
-Refer to Figure 13-1. Suppose the production function shifts from TP2 to TP1. Such a shift in the total product curve is most likely due to a decrease in the firm's

Accepted Answer

A)   costs of production.
B)   product price.
C)   market share.
D)   productivity.E) B) and C)
F) B) and D)

Question 3

Scenario 13-14
If Farmer Brown plants no seeds on his farm, he gets no harvest. If he plants 1 bag of seeds, he gets 5 bushels of wheat. If he plants 2 bags, he gets 9 bushels. If he plants 3 bags, he gets 12 bushels. A bag of seeds costs $120, and seeds are his only cost.
-Refer to Scenario 13-14. Farmer Brown's production function exhibits

Accepted Answer

A)   increasing marginal product.
B)   constant marginal product.
C)   diminishing marginal product.
D)   The production function is unrelated to the marginal product.E) A) and B)
F) None of the above

Question 4

How would a production function that exhibits decreasing marginal product affect the shape of the total cost curve?
Explain or draw a graph.

Accepted Answer

The total cost curve will incr...

Question 5

Bubba is a shrimp fisherman who could earn $5,000 as a fishing tour guide. Instead, he is a full-time shrimp fisherman. In calculating the economic profit of his shrimp business, the $5,000 that Bubba gave up is counted as part of the shrimp business's

Accepted Answer

A)   total revenue.
B)   explicit costs.
C)   implicit costs.
D)   marginal costs.E) A) and D)
F) All of the above

Question 6

In the long run a company that produces and sells organic tofu incurs total costs of $1,200 when output is 1,200 units and $1,650 when output is 1,400 units. The tofu company 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.E) A) and B)
F) B) and D)

Question 7

Table 13-4
Charles's Math Tutoring
 
-Refer to Table 13-4. What is the marginal product of the second worker?

Accepted Answer

A)   15 students
B)   20 students
C)   22.5 students
D)   25 studentsE) A) and D)
F) All of the above

Question 8

Patrice owns a travel agency. Her accountant most likely includes which of the following costs on her financial statements?

Accepted Answer

A)   wages Patrice could earn giving tennis lessons
B)   dividends Patrice's money was earning in the stock market before Patrice sold her stock and leased the space for her travel agency
C)   the cost of utilities for operating the storefront
D)   Both b and c are correct.E) B) and C)
F) A) and C)

Question 9

What are opportunity costs? How do explicit and implicit costs relate to opportunity costs?

Accepted Answer

The opportunity cost of an ite...

Question 10

Figure 13-9
The figure below depicts average total cost functions for a firm that produces automobiles. 
-Refer to Figure 13-9. At output levels greater than N, the firm experiences

Accepted Answer

A)   economies of scale.
B)   constant returns to scale.
C)   diseconomies of scale.
D)   minimum efficient scale.E) None of the above
F) B) and D)

Question 11

Anya has decided to start her own hair-styling salon. To purchase the necessary equipment, Anya withdrew $10,000 from her savings account, which was earning 3% interest, and borrowed an additional $5,000 from the bank at an interest rate of 8%. What is Anya's annual opportunity cost of the financial capital that has been invested in the business?

Accepted Answer

A)   $300
B)   $400
C)   $700
D)   $1,650E) B) and C)
F) B) and D)

Question 12

When a firm is experiencing diseconomies of scale, long-run

Accepted Answer

A)   average total cost is minimized.
B)   average total cost is greater than long-run marginal cost.
C)   average total cost is less than long-run marginal cost.
D)   marginal cost is minimized.E) A) and B)
F) None of the above

Question 13

The marginal-cost curve intersects the average-total-cost curve at the minimum point of the average-total-cost curve.

Accepted Answer

A) True 
 B)False

Question 14

The total cost to the firm of producing zero units of output is

Accepted Answer

A)   zero in both the short run and the long run.
B)   its fixed cost in the short run and zero in the long run.
C)   its fixed cost in both the short run and the long run.
D)   its variable cost in both the short run and the long run.E) C) and D)
F) B) and C)

Question 15

Figure 13-3 
-Refer to Figure 13-3. The graph illustrates a typical total cost curve. Based on its shape, what does the corresponding production function look like?

Accepted Answer

A)   an upward-sloping curve that increases at an increasing rate
B)   an upward-sloping curve that increases at a decreasing rate
C)   a downward-sloping curve
D)   a horizontal straight lineE) A) and C)
F) None of the above

Question 16

Consider a small hair styling salon. List some examples of explicit costs of this business.

Accepted Answer

shampoo, conditioner, other products for...

Question 17

The average-fixed-cost curve is always declining. How does this affect the relationship between the AVC and ATC curves?

Accepted Answer

ATC = AVC + AFC, so the vertical distanc...

Question 18

Table 13-5
 
-Refer to Table 13-5. Assume that fixed costs are $500, and variable costs are $100 per worker. For this firm, what are the shapes of the production function and the total-cost curve?

Accepted Answer

A)   Both the production function and total-cost curve are increasing at an increasing rate.
B)   Both the production function and total-cost curve are increasing at a decreasing rate.
C)   The production function is increasing at an increasing rate, whereas the total-cost function is increasing at a decreasing rate.
D)   The production function is increasing at a decreasing rate, whereas the total-cost function is increasing at an increasing rate.E) A) and B)
F) All of the above

Question 19

Tom quit his $65,000 a year corporate lawyer job to open up his own law practice. In Tom's first year in business his total revenue equaled $150,000. Tom's explicit cost during the year totaled $85,000. What is Tom's economic profit for his first year in business?

Accepted Answer

A)   $0
B)   $20,000
C)   $65,000
D)   $85,000E) A) and B)
F) C) and D)

Question 20

Consider a small family wheat farm. List some examples of explicit costs of farming.

Accepted Answer

seeds, fertilizer, pesticide, ...

Exam 13: The Costs of Production

The marginal-cost curve intersects the average-total-cost curve at the minimum point of the average-total-cost curve.

Correct Answer
verified

The difference between economic profit and accounting profit is that economic profit is calculated based on both implicit and explicit costs whereas accounting profit is calculated based on explicit costs only.

Correct Answer
verified

What are opportunity costs? How do explicit and implicit costs relate to opportunity costs?

Correct Answer
verified
The opportunity cost of an ite...
View Answer

In the long run a company that produces and sells organic tofu incurs total costs of $1,200 when output is 1,200 units and $1,650 when output is 1,400 units. The tofu company exhibits

Correct Answer
verified

How would a production function that exhibits decreasing marginal product affect the shape of the total cost curve? Explain or draw a graph.

Correct Answer
verified
The total cost curve will incr...
View Answer

Correct Answer
verified

Correct Answer
verified

The average-fixed-cost curve is always declining. How does this affect the relationship between the AVC and ATC curves?

Correct Answer
verified
ATC = AVC + AFC, so the vertical distanc...
View Answer

Consider a small family wheat farm. List some examples of explicit costs of farming.

Correct Answer
verified
seeds, fertilizer, pesticide, ...
View Answer

Figure 13-1 -Refer to Figure 13-1. Suppose the production function shifts from TP2 to TP1. Such a shift in the total product curve is most likely due to a decrease in the firm's

Correct Answer
verified

Table 13-4 Charles's Math Tutoring -Refer to Table 13-4. What is the marginal product of the second worker?

Correct Answer
verified

Figure 13-3 -Refer to Figure 13-3. The graph illustrates a typical total cost curve. Based on its shape, what does the corresponding production function look like?

Correct Answer
verified

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. At output levels greater than N, the firm experiences

Correct Answer
verified

When a firm is experiencing diseconomies of scale, long-run

Correct Answer
verified

Tom quit his $65,000 a year corporate lawyer job to open up his own law practice. In Tom's first year in business his total revenue equaled $150,000. Tom's explicit cost during the year totaled $85,000. What is Tom's economic profit for his first year in business?

Correct Answer
verified

Consider a small hair styling salon. List some examples of explicit costs of this business.

Correct Answer
verified
shampoo, conditioner, other products for...
View Answer

Table 13-5 -Refer to Table 13-5. Assume that fixed costs are $500, and variable costs are $100 per worker. For this firm, what are the shapes of the production function and the total-cost curve?

Correct Answer
verified

Bubba is a shrimp fisherman who could earn $5,000 as a fishing tour guide. Instead, he is a full-time shrimp fisherman. In calculating the economic profit of his shrimp business, the $5,000 that Bubba gave up is counted as part of the shrimp business's

Correct Answer
verified

The total cost to the firm of producing zero units of output is

Correct Answer
verified

Patrice owns a travel agency. Her accountant most likely includes which of the following costs on her financial statements?

Correct Answer
verified

Exam 13: The Costs of Production

The marginal-cost curve intersects the average-total-cost curve at the minimum point of the average-total-cost curve.

Correct AnswerverifiedShow Answer

The difference between economic profit and accounting profit is that economic profit is calculated based on both implicit and explicit costs whereas accounting profit is calculated based on explicit costs only.

Correct AnswerverifiedShow Answer

What are opportunity costs? How do explicit and implicit costs relate to opportunity costs?

Correct AnswerverifiedThe opportunity cost of an ite...View AnswerShow Answer

In the long run a company that produces and sells organic tofu incurs total costs of $1,200 when output is 1,200 units and $1,650 when output is 1,400 units. The tofu company exhibits

Correct AnswerverifiedShow Answer

How would a production function that exhibits decreasing marginal product affect the shape of the total cost curve? Explain or draw a graph.

Correct AnswerverifiedThe total cost curve will incr...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The average-fixed-cost curve is always declining. How does this affect the relationship between the AVC and ATC curves?

Correct AnswerverifiedATC = AVC + AFC, so the vertical distanc...View AnswerShow Answer

Consider a small family wheat farm. List some examples of explicit costs of farming.

Correct Answerverifiedseeds, fertilizer, pesticide, ...View AnswerShow Answer

Figure 13-1 -Refer to Figure 13-1. Suppose the production function shifts from TP2 to TP1. Such a shift in the total product curve is most likely due to a decrease in the firm's

Correct AnswerverifiedShow Answer

Table 13-4 Charles's Math Tutoring -Refer to Table 13-4. What is the marginal product of the second worker?

Correct AnswerverifiedShow Answer

Figure 13-3 -Refer to Figure 13-3. The graph illustrates a typical total cost curve. Based on its shape, what does the corresponding production function look like?

Correct AnswerverifiedShow Answer

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. At output levels greater than N, the firm experiences

Correct AnswerverifiedShow Answer

When a firm is experiencing diseconomies of scale, long-run

Correct AnswerverifiedShow Answer

Tom quit his $65,000 a year corporate lawyer job to open up his own law practice. In Tom's first year in business his total revenue equaled $150,000. Tom's explicit cost during the year totaled $85,000. What is Tom's economic profit for his first year in business?

Correct AnswerverifiedShow Answer

Consider a small hair styling salon. List some examples of explicit costs of this business.

Correct Answerverifiedshampoo, conditioner, other products for...View AnswerShow Answer

Table 13-5 -Refer to Table 13-5. Assume that fixed costs are $500, and variable costs are $100 per worker. For this firm, what are the shapes of the production function and the total-cost curve?

Correct AnswerverifiedShow Answer

Bubba is a shrimp fisherman who could earn $5,000 as a fishing tour guide. Instead, he is a full-time shrimp fisherman. In calculating the economic profit of his shrimp business, the $5,000 that Bubba gave up is counted as part of the shrimp business's

Correct AnswerverifiedShow Answer

The total cost to the firm of producing zero units of output is

Correct AnswerverifiedShow Answer

Patrice owns a travel agency. Her accountant most likely includes which of the following costs on her financial statements?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
verified
The opportunity cost of an ite...
View Answer

Correct Answer
verified

Correct Answer
verified
The total cost curve will incr...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
ATC = AVC + AFC, so the vertical distanc...
View Answer

Correct Answer
verified
seeds, fertilizer, pesticide, ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
shampoo, conditioner, other products for...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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