Question 1

Vanessa owns a horse ranch.Her total costs are $550,000 per year,and her fixed costs are $205,000 per year.This means that her variable costs are

Accepted Answer

A)   $550,000.
B)   $205,000.
C)   $345,000.
D)   $755,000.
E)   $108,000.F) None of the above
G) B) and D)

Question 2

Lester owns a candy store that produces,among other things,chocolate fountains.He currently has 5 employees; with 5 employees,his candy store can produce 7 chocolate fountains per day.If he hired a sixth employee,he'd be able to produce 9 chocolate fountains per day.Therefore,the marginal product of the sixth employee is ________ chocolate fountain(s) .

Accepted Answer

A)   5
B)   7
C)   9
D)   2
E)   F) A) and B)
G) A) and E)

Question 3

Shawn owns a stroller store.Last year his average cost of selling a stroller was $1,000.If he expands the size of his store this year and sees his average cost increase to $1,050,his long-run average total cost curve should be

Accepted Answer

A)   horizontal.
B)   U-shaped.
C)   vertical.
D)   downward sloping.
E)   upward sloping.F) A) and D)
G) B) and E)

Question 4

An explicit cost for a business that manufactures bicycles would be the

Accepted Answer

A)   value of the products that the firm's employees could produce at another company.
B)   salary that the owner of the business could earn elsewhere.
C)   goods and services provided by the government with the taxes the firm pays.
D)   wages paid to employees.
E)   various products that could be made with the steel used to make bicycles.F) D) and E)
G) A) and B)

Question 5

Refer to the accompanying graph to answer the following questions.
 
-If the firm depicted in the graph had to pay higher rent to its landlord,we would expect its ________ curve to shift ________.

Accepted Answer

A)   average total cost (AT
C)  ; down
B)   average variable cost (AV
C)  ; down
C)   average total cost (AT
C)  ; up
D)   marginal cost (M
C)  ; up
E)   average variable cost (AV
C)  ; upF) C) and D)
G) A) and B)

Question 6

What is the concept of diminishing marginal product?

Accepted Answer

The concept of diminishing mar...

Question 7

The diminishing marginal product is NOT responsible for the shape of ________ cost curve.

Accepted Answer

A)   total fixed
B)   total variable
C)   total
D)   average variable
E)   average totalF) C) and E)
G) B) and D)

Question 8

The production function for bookshelves includes

Accepted Answer

A)   yeast,flour,pans,ovens,and bakers.
B)   electric guitars,drums,microphones,musicians,and a stage.
C)   foam cushions,fabric,wood,nails,and furniture makers.
D)   wood,nails,carpenters,saws,and hammers.
E)   wool fabric,buttons,a zipper,a sewing machine,and a tailor.F) A) and B)
G) None of the above

Question 9

Economists assume that the cost of ________ is fixed in the short run.

Accepted Answer

A)   labor
B)   capital
C)   raw materials
D)   legal expenses
E)   repairsF) A) and B)
G) None of the above

Question 10

Another term for factors of production is

Accepted Answer

A)   outputs.
B)   inputs.
C)   profits.
D)   revenues.
E)   costs.F) A) and E)
G) A) and C)

Question 11

Use the following graph to answer the following questions.
 
-If the firm expanded its scale of production and found that its average costs increased,which of the curves would reflect this situation?

Accepted Answer

A)   LRATC1 and LRATC3
B)   LRATC2
C)   LRATC3
D)   LRATC1
E)   LRATC2 and LRATC3F) A) and E)
G) All of the above

Question 12

How are long-run costs different from short-run costs?

Accepted Answer

Long-run costs are different from short-...

Question 13

Use the following graph to answer the following questions.
 
-A firm expands its scale of production and finds that its long-run average total cost curve looks like LRATC3.It might look this way because the firm

Accepted Answer

A)   is able to pay its employees less.
B)   adds several additional layers of management,which increase its costs.
C)   is able to reduce its tax burden.
D)   is able to produce output more efficiently.
E)   is able to sell more output.F) None of the above
G) D) and E)

Question 14

The long-run average total costs for a firm are equal to short-run average total costs when

Accepted Answer

A)   the long-run average total cost curve is declining.
B)   the long-run average total cost curve is at a minimum point.
C)   the long-run average total cost curve is increasing.
D)   production is maximized.
E)   production is at any point along the long-run average cost curve.F) A) and E)
G) A) and D)

Question 15

A firm's economic profit is always less than its accounting profit because

Accepted Answer

A)   accounting profit considers explicit costs,which economic profit does not.
B)   economic profit considers implicit costs,which accounting profit does not.
C)   economic profit is always zero,no matter what kind of firm it is.
D)   accounting profit considers implicit costs,which economic profit does not.
E)   accounting profit is always positive,no matter what kind of firm it is.F) B) and C)
G) All of the above

Question 16

Selene owns a craft store.Her total costs are $1.2 million per year,and her variable costs are $750,000 per year.This means that her fixed costs are

Accepted Answer

A)   $1.2 million.
B)   $750,000.
C)   $450,000.
D)   $300,000.
E)   $1.95 million.F) C) and D)
G) B) and D)

Question 17

Implicit costs can be difficult to measure because

Accepted Answer

A)   business owners cannot always observe them directly.
B)   they are not measured in dollars.
C)   they are always very expensive.
D)   they are always greater than explicit costs.
E)   they include expenses like taxes.F) All of the above
G) A) and B)

Question 18

Why is the long-run average cost curve important to a firm?

Accepted Answer

The long-run average...

Question 19

Rahim owns a candy factory.If he decided to expand the size of his factory so that he could make more candy,how would he know if he is experiencing constant returns to scale?

Accepted Answer

A)   His long-run average cost of making each piece of candy remains unchanged.
B)   His long-run total cost of making candy decreases.
C)   His long-run average cost of making each piece of candy decreases.
D)   His long-run total cost of making candy remains unchanged.
E)   His long-run average cost of making each piece of candy increases.F) A) and B)
G) A) and C)

Question 20

What would cause a firm's production function to change?

Accepted Answer

A)   expanding the size of the factories
B)   increasing the quantity of labor and capital
C)   increasing the quantity of capital
D)   increasing the quantity of labor
E)   the adoption of new technologyF) D) and E)
G) A) and C)

Exam 8: Business Costs and Production

Implicit costs can be difficult to measure because

Correct Answer
verified

Selene owns a craft store.Her total costs are $1.2 million per year,and her variable costs are $750,000 per year.This means that her fixed costs are

Correct Answer
verified

The long-run average total costs for a firm are equal to short-run average total costs when

Correct Answer
verified

Shawn owns a stroller store.Last year his average cost of selling a stroller was $1,000.If he expands the size of his store this year and sees his average cost increase to $1,050,his long-run average total cost curve should be

Correct Answer
verified

How are long-run costs different from short-run costs?

Correct Answer
verified
Long-run costs are different from short-...
View Answer

Use the following graph to answer the following questions. -If the firm expanded its scale of production and found that its average costs increased,which of the curves would reflect this situation?

Correct Answer
verified

Why is the long-run average cost curve important to a firm?

Correct Answer
verified
The long-run average...
View Answer

What would cause a firm's production function to change?

Correct Answer
verified

What is the concept of diminishing marginal product?

Correct Answer
verified
The concept of diminishing mar...
View Answer

Rahim owns a candy factory.If he decided to expand the size of his factory so that he could make more candy,how would he know if he is experiencing constant returns to scale?

Correct Answer
verified

An explicit cost for a business that manufactures bicycles would be the

Correct Answer
verified

Correct Answer
verified

Vanessa owns a horse ranch.Her total costs are $550,000 per year,and her fixed costs are $205,000 per year.This means that her variable costs are

Correct Answer
verified

Use the following graph to answer the following questions. -A firm expands its scale of production and finds that its long-run average total cost curve looks like LRATC3.It might look this way because the firm

Correct Answer
verified

A firm's economic profit is always less than its accounting profit because

Correct Answer
verified

The diminishing marginal product is NOT responsible for the shape of ________ cost curve.

Correct Answer
verified

The production function for bookshelves includes

Correct Answer
verified

Another term for factors of production is

Correct Answer
verified

Refer to the accompanying graph to answer the following questions. -If the firm depicted in the graph had to pay higher rent to its landlord,we would expect its curve to shift .

Correct Answer
verified

Economists assume that the cost of ________ is fixed in the short run.

Correct Answer
verified

Exam 8: Business Costs and Production

Implicit costs can be difficult to measure because

Correct AnswerverifiedShow Answer

Selene owns a craft store.Her total costs are $1.2 million per year,and her variable costs are $750,000 per year.This means that her fixed costs are

Correct AnswerverifiedShow Answer

The long-run average total costs for a firm are equal to short-run average total costs when

Correct AnswerverifiedShow Answer

Shawn owns a stroller store.Last year his average cost of selling a stroller was $1,000.If he expands the size of his store this year and sees his average cost increase to $1,050,his long-run average total cost curve should be

Correct AnswerverifiedShow Answer

How are long-run costs different from short-run costs?

Correct AnswerverifiedLong-run costs are different from short-...View AnswerShow Answer

Use the following graph to answer the following questions. -If the firm expanded its scale of production and found that its average costs increased,which of the curves would reflect this situation?

Correct AnswerverifiedShow Answer

Why is the long-run average cost curve important to a firm?

Correct AnswerverifiedThe long-run average...View AnswerShow Answer

What would cause a firm's production function to change?

Correct AnswerverifiedShow Answer

What is the concept of diminishing marginal product?

Correct AnswerverifiedThe concept of diminishing mar...View AnswerShow Answer

Rahim owns a candy factory.If he decided to expand the size of his factory so that he could make more candy,how would he know if he is experiencing constant returns to scale?

Correct AnswerverifiedShow Answer

An explicit cost for a business that manufactures bicycles would be the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Vanessa owns a horse ranch.Her total costs are $550,000 per year,and her fixed costs are $205,000 per year.This means that her variable costs are

Correct AnswerverifiedShow Answer

Use the following graph to answer the following questions. -A firm expands its scale of production and finds that its long-run average total cost curve looks like LRATC3.It might look this way because the firm

Correct AnswerverifiedShow Answer

A firm's economic profit is always less than its accounting profit because

Correct AnswerverifiedShow Answer

The diminishing marginal product is NOT responsible for the shape of ________ cost curve.

Correct AnswerverifiedShow Answer

The production function for bookshelves includes

Correct AnswerverifiedShow Answer

Another term for factors of production is

Correct AnswerverifiedShow Answer

Refer to the accompanying graph to answer the following questions. -If the firm depicted in the graph had to pay higher rent to its landlord,we would expect its ________ curve to shift ________.

Correct AnswerverifiedShow Answer

Economists assume that the cost of ________ is fixed in the short run.

Correct AnswerverifiedShow Answer

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Correct Answer
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Long-run costs are different from short-...
View Answer

Correct Answer
verified

Correct Answer
verified
The long-run average...
View Answer

Correct Answer
verified

Correct Answer
verified
The concept of diminishing mar...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Refer to the accompanying graph to answer the following questions. -If the firm depicted in the graph had to pay higher rent to its landlord,we would expect its curve to shift .

Correct Answer
verified

Correct Answer
verified