1. A firm transforms inputs of production into outputs for consumers.
2. The farmer in question loses $2,000 in profit after accounting for costs of labor, rent, and advertising against revenue from selling 2,000 mangos at $2 each.
3. The salary an entrepreneur could have earned in a corporate job is not an explicit cost. Explicit costs include salaries paid to employees, business taxes paid by the entrepreneur, and money paid for raw materials.
1. A firm transforms inputs of production into outputs for consumers.
2. The farmer in question loses $2,000 in profit after accounting for costs of labor, rent, and advertising against revenue from selling 2,000 mangos at $2 each.
3. The salary an entrepreneur could have earned in a corporate job is not an explicit cost. Explicit costs include salaries paid to employees, business taxes paid by the entrepreneur, and money paid for raw materials.
1. A firm transforms inputs of production into outputs for consumers.
2. The farmer in question loses $2,000 in profit after accounting for costs of labor, rent, and advertising against revenue from selling 2,000 mangos at $2 each.
3. The salary an entrepreneur could have earned in a corporate job is not an explicit cost. Explicit costs include salaries paid to employees, business taxes paid by the entrepreneur, and money paid for raw materials.
1. A firm transforms inputs of production into outputs for consumers.
2. The farmer in question loses $2,000 in profit after accounting for costs of labor, rent, and advertising against revenue from selling 2,000 mangos at $2 each.
3. The salary an entrepreneur could have earned in a corporate job is not an explicit cost. Explicit costs include salaries paid to employees, business taxes paid by the entrepreneur, and money paid for raw materials.
transforms _____ of production into _____ for consumers. A) inputs; outputs B) inputs; resources C) factors; inputs D) outputs; outputs
2. If the price of a mango is $2 and a farmer
sells 2,000 mangos, but it costs him $400 for labor, $1,600 for rent, and $2,000 for advertising, then the farmer: A) makes $2,000 in profit. B) loses $2,000 in profit. C) makes $2,000 in total revenue. D) makes $4,000 in total revenue.
3. All of the following are explicit costs,
EXCEPT: A) salaries paid to employees. B) business taxes paid by an entrepreneur. C) the salary an entrepreneur could have earned in a corporate job. D) money paid for raw materials.
4. Economic costs are the sum of _____ and
_____. A) sunk costs; implicit costs B) explicit costs; implicit costs C) explicit costs; sunk costs D) Economic costs are the same as explicit costs 5. Which of the following is NOT an explicit cost? A) lease payments B) Insurance C) office supplies D) earnings that the owner could have earned at an alternate job
6. The short run is:
A) a year or less. B) up to two years. C) the period of time in which the firm cannot change its use of at least one input. D) the period of time during which the firm can alter its output.
7. Which of the following occurs in the long
run? A) A grocery store expands its hours of operation. B) A restaurant hires another server. C) An aircraft company adds another shift. D) A new movie theater is built.
8. Assuming fixed quantities of other inputs,
the total product curve relates: A) output to a variable input. B) output to variable cost. C) output to total cost. D) fixed cost to variable cost.
Use the following to answer question 9:
Production in the Short Run Labor Total Product 0 0 1 5 2 13 3 18 4 24 5 28
9. (Table) According to the table,
diminishing returns occur when hiring _______ worker. A) the first B) the second C) the third D) the fourth
10. Staci's Sign Shoppe makes signs for
businesses. Staci is currently producing 210 signs per week with three employees. Staci hires an additional worker and total output per week rises to 328. The marginal product of the last worker is ___________ signs. A) 82 B) 118 C) 210 D) 378
11. _____ is found by dividing total output by
the number of workers employed to produce that output. A) Marginal cost B) Average cost C) Marginal product D) Average product
12. The Wonderful Gadget Company
produces 500 gadgets per week with 50 employees. It hires an additional worker and output rises to 507 gadgets. The marginal product of the last worker hired is ______ gadget(s). A) 500 B) 507 C) 7 D) 1
sixth worker? A) 8.5 B) 8 C) 7.75 D) There is not enough information to answer this question.
15. (Table) In the table, what is the output
with 7 workers? A) 50 B) 51 C) 54 D) 55
16. (Table) In the table, the marginal product
for the fourth worker is: A) 10. B) 13. C) 14. D) 12.
17. (Table) In the table, as long as marginal
product is greater than average product: A) the average product declines. B) the marginal product will be negative. C) the average product rises. D) the average product will be negative. 18. (Table) In the table, increasing marginal returns take place: A) for the first 3 workers. B) for the first 4 workers. C) for all 10 workers. D) for the first 5 workers.
19. (Table) In the table, diminishing marginal
returns begin with the: A) sixth worker. B) fifth worker. C) seventh worker. D) eighth worker.
20. (Table) In the table, negative marginal
returns occur beginning with worker: A) 5. B) 7. C) 9. D) 10.
21. Suppose that the 23rd worker generates a
marginal product equal to eight boxes of output and that the average product of 23 workers employed is five boxes per worker. We can conclude that: A) average product is rising. B) marginal product is falling. C) average product is neither rising nor falling. D) marginal product is neither rising nor falling.
22. When a new worker hired adds more to
total output than the previous worker hired, you have: A) increasing marginal returns. B) increasing marginal costs. C) decreasing marginal returns. D) constant marginal costs.
Referring to both the table and the figure, adding a third worker leads to: A) increasing marginal returns. B) diminishing marginal returns. C) constant marginal returns. D) negative marginal returns.
24. (Figure: Determining Marginal Returns)
Referring to both the table and the figure, adding a fifth worker leads to: A) increasing marginal returns. B) diminishing marginal returns. C) constant marginal returns. D) negative marginal returns.
25. (Figure: Determining Marginal Returns)
Referring to both the table and the figure, if a tenth worker is added, this leads to: A) increasing marginal returns. B) diminishing marginal returns. C) constant marginal returns. D) negative marginal returns.
producing 54 units of output is: A) $1,250. B) $500. C) $2,000. D) $1,750.
31. (Table) In the table, the average fixed cost
of producing 40 units of output is: A) $12. B) $12.5. C) $18.52. D) $25.
32. At 500 units of output, total cost is
$50,000 and variable cost is $5,000. What does fixed cost equal at 500 units? A) $50,000 B) $5,000 C) $9,000 D) $45,000
33. Assume that the fixed input is solely rent
and the variable input is solely labor. Then marginal cost would be equal to: A) rental costs/output B) labor costs/output C) change in rental costs/change in output. D) change in labor costs/change in output.
Use the following to answer question 34:
Figure: Understanding Cost Curves 2
34. (Figure: Understanding Cost Curves 2)
Match the curves in the figure (lines A, B, and C) with the correct cost curve name (average variable cost, average total cost, average fixed cost, or marginal cost). A) A = marginal cost; B = average variable cost; C = average total cost B) A = average variable cost; B = average total cost; C = marginal cost C) A = marginal cost; B = average fixed cost; C = average total cost D) A = marginal cost; B = average total cost; C = average fixed cost
35. As output increases, average total cost and
average variable cost get closer to each other because: A) marginal cost increases. B) average fixed cost declines. C) marginal cost equals average variable cost at its minimum. D) marginal cost equals average total cost at its minimum.
36. At 20 units of output, a firm finds that its
average variable cost is $5 per unit and its average total cost is $8 per unit. Therefore, its: A) marginal cost is less than $3 per unit. B) marginal cost is $3 per unit. C) average fixed cost is $3 per unit. D) marginal cost is equal to its average fixed cost.
37. At 50 units of output, a firm's average
variable cost is $30. Therefore, its: A) average total cost is $30. B) average total cost is greater than $30. C) average total cost is less than $30. D) marginal cost is $30.
38. At 30 units of output, a firm's marginal
cost and average variable cost both equal $10. Therefore, assuming normally shaped cost curves, at 29 units of output its marginal cost: A) is greater than $10 and its average variable cost is less than $10. B) is less than $10 and its average variable cost is more than $10. C) and its average variable cost are each greater than $10. D) and its average variable cost are each equal to $10.
39. If a firm produces 10 units of output and
incurs $30 in average variable cost and $45 in average total cost, total fixed cost is: A) $3. B) $150. C) $50. D) $300.
40. If a firm produces 10 units of output and
incurs $25 in average variable cost and $5 in average fixed cost, total cost is: A) $35. B) $50. C) $300. D) $350.
