Question 1

Vipsana's Gyros House sells gyros.The cost of ingredients (pita,meat,spices,etc.) to make a gyro is $2.00.Vipsana pays her employees $60 per day.She also incurs a fixed cost of $120 per day.Calculate Vipsana's total cost per day when she produces 50 gyros using two workers?

Accepted Answer

A)   $100
B)   $124.40
C)   $220
D)   $340E) None of the above
F) C) and D)

Question 2

Minimum efficient scale is defined as the level of output at which

Accepted Answer

A)   all economies of scale are exhausted.
B)   diminishing returns affect average total cost.
C)   the firm's long-run average total cost starts falling.
D)   the maximum output is produced.E) B) and C)
F) A) and D)

Question 3

Diseconomies of scale occur when

Accepted Answer

A)   long-run average costs rise as a firm increases its output.
B)   long-run average cost fall as a firm expands its plant size.
C)   short-run average costs rise as a firm expands its plant size.
D)   long-run labor costs rise as a firm increases its output.E) A) and B)
F) A) and C)

Question 4

State the law of diminishing marginal returns.

Accepted Answer

As more units of a variable in...

Question 5

Which of the following statements best describes the economic short run?

Accepted Answer

A)   It is a period of one year or less.
B)   It is a period during which firms are free to vary all of their inputs.
C)   It is a period during which at least one of the firm's inputs is fixed.
D)   It is a period during which fixed inputs become variable inputs because of depreciation.E) A) and B)
F) A) and C)

Question 6

The average total cost of production

Accepted Answer

A)   is the extra cost required to produce one more unit.
B)   equals the explicit cost of production.
C)   equals total cost of production divided by the level of output.
D)   equals total cost of production multiplied times the level of output.E) A) and B)
F) None of the above

Question 7

Ford Motor Company started producing the Model A at plants scattered around the United States

Accepted Answer

A)   to save on transport costs.
B)   because diseconomies of scale at its initial River Rouge plant resulted in high production costs.
C)   to locate its production centers closer to its customers.
D)   because it was not able to attract skilled workers in Michigan (where its first plant was located) .E) A) and D)
F) C) and D)

Question 8

The marginal product of labor is defined as

Accepted Answer

A)   the change in total revenue that results when an additional unit of a labor is hired.
B)   the additional labor required to produce one more unit of output.
C)   the additional labor cost of producing one more unit of output.
D)   the change in output that a firm produces as a result of hiring one more worker.E) C) and D)
F) B) and C)

Question 9

Which of the following statements is false?

Accepted Answer

A)   An explicit cost is a nonmonetary opportunity cost.
B)   In the short run: total cost = fixed cost + variable cost.
C)   Variable costs are costs that change as output changes.
D)   In the long run there are no fixed costs.E) All of the above
F) B) and D)

Question 10

Minimum efficient scale is defined as the level of output at which the short-run average total cost stops decreasing.

Accepted Answer

A) True 
 B)False

Question 11

Sally quit her job as an auto mechanic earning $50,000 per year to start her own business.To save money she operates her business out of a small building she owns which,until she started her own business,she had rented out for $10,000 per year.She also invested her $20,000 savings (which earned a market interest rate of 5% per year)in her business.You are given the following information about the first year of her operations.
Total revenue $120,000
Cost of labor 40,000
Cost of materials 15,000
Equipment rental 5,000
a.Calculate her economic costs.
b.Calculate her accounting costs.
c.Calculate her implicit costs.
d.Sally tells you that she would really like to move to a location closer to town but she decided against it because "right now I don't pay any rent and it will cost me $10,000 a year to rent near town." Do you agree with her reasoning?

Accepted Answer

a.$121,000 = 40,000 (labor)+ 15,000 (mat...

Question 12

Increases in the marginal product of labor result from

Accepted Answer

A)   the use of new technology.
B)   hiring more efficient workers.
C)   the division of labor and specialization.
D)   increasing the usage of all inputs.E) B) and C)
F) None of the above

Question 13

Which of the following statements is true?

Accepted Answer

A)   As output increases, average fixed cost becomes smaller and smaller.
B)   Average fixed cost does not change as output increases.
C)   The marginal cost curve intersects the average fixed cost curve at its minimum point.
D)   When marginal cost is greater than average fixed cost, average fixed cost increases.E) A) and B)
F) B) and C)

Question 14

Which of the following is a reason why a firm would experience diseconomies of scale?

Accepted Answer

A)   To finance an increase in the size of its plant a firm must borrow more money or sell more shares of stock.
B)   As the size of the firm increases, it becomes more difficult to find markets where it doesn't already have operations.
C)   As the size of the firm increases it becomes more difficult to coordinate the operations of its manufacturing plants.
D)   As the size of the firm increases, it must operate in other countries where differences in language, customs and laws increase its average costs.E) B) and D)
F) A) and D)

Question 15

Table 11-7
  Table 11-7 shows cost data for Lotus Lanterns, a producer of whimsical night lights.
-Refer to Table 11-7.What is the marginal cost per unit of production when the firm produces 100 lanterns?

Accepted Answer

A)   $420
B)   $32
C)   $11.1
D)   $8.1E) None of the above
F) A) and B)

Question 16

Are the costs of utilities always fixed,always variable,or can they be both? Briefly explain.

Accepted Answer

For many firms,the cost of utilities can...

Question 17

If marginal product is equal to average product,then total product is at a maximum.

Accepted Answer

A) True 
 B)False

Question 18

The marginal cost curve is U-shaped because of the law of increasing opportunity costs.

Accepted Answer

A) True 
 B)False

Question 19

Figure 11-6  Figure 11-6 contains information about the short run cost structure of a firm.
-Refer to Figure 11-6.In the figure above which letter represents the average variable cost curve?

Accepted Answer

A)   A
B)   B
C)   C
D)   DE) B) and C)
F) All of the above

Question 20

What is the difference between explicit costs and implicit costs? List three examples each of explicit costs and implicit costs that may be experienced by a small business.

Accepted Answer

Explicit costs are costs that involve sp...

Exam 11: Technology, production, and Costs

Minimum efficient scale is defined as the level of output at which

Correct Answer
verified

Ford Motor Company started producing the Model A at plants scattered around the United States

Correct Answer
verified

Are the costs of utilities always fixed,always variable,or can they be both? Briefly explain.

Correct Answer
verified
For many firms,the cost of utilities can...
View Answer

The marginal cost curve is U-shaped because of the law of increasing opportunity costs.

Correct Answer
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What is the difference between explicit costs and implicit costs? List three examples each of explicit costs and implicit costs that may be experienced by a small business.

Correct Answer
verified
Explicit costs are costs that involve sp...
View Answer

Which of the following statements is true?

Correct Answer
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Table 11-7 Table 11-7 shows cost data for Lotus Lanterns, a producer of whimsical night lights. -Refer to Table 11-7.What is the marginal cost per unit of production when the firm produces 100 lanterns?

Correct Answer
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The average total cost of production

Correct Answer
verified

Increases in the marginal product of labor result from

Correct Answer
verified

State the law of diminishing marginal returns.

Correct Answer
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As more units of a variable in...
View Answer

Correct Answer
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a.$121,000 = 40,000 (labor)+ 15,000 (mat...
View Answer

Minimum efficient scale is defined as the level of output at which the short-run average total cost stops decreasing.

Correct Answer
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Figure 11-6 Figure 11-6 contains information about the short run cost structure of a firm. -Refer to Figure 11-6.In the figure above which letter represents the average variable cost curve?

Correct Answer
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Vipsana's Gyros House sells gyros.The cost of ingredients (pita,meat,spices,etc.) to make a gyro is $2.00.Vipsana pays her employees $60 per day.She also incurs a fixed cost of $120 per day.Calculate Vipsana's total cost per day when she produces 50 gyros using two workers?

Correct Answer
verified

The marginal product of labor is defined as

Correct Answer
verified

Diseconomies of scale occur when

Correct Answer
verified

Which of the following statements best describes the economic short run?

Correct Answer
verified

Which of the following statements is false?

Correct Answer
verified

If marginal product is equal to average product,then total product is at a maximum.

Correct Answer
verified

Which of the following is a reason why a firm would experience diseconomies of scale?

Correct Answer
verified

Exam 11: Technology, production, and Costs

Minimum efficient scale is defined as the level of output at which

Correct AnswerverifiedShow Answer

Ford Motor Company started producing the Model A at plants scattered around the United States

Correct AnswerverifiedShow Answer

Are the costs of utilities always fixed,always variable,or can they be both? Briefly explain.

Correct AnswerverifiedFor many firms,the cost of utilities can...View AnswerShow Answer

The marginal cost curve is U-shaped because of the law of increasing opportunity costs.

Correct AnswerverifiedShow Answer

What is the difference between explicit costs and implicit costs? List three examples each of explicit costs and implicit costs that may be experienced by a small business.

Correct AnswerverifiedExplicit costs are costs that involve sp...View AnswerShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

Table 11-7 Table 11-7 shows cost data for Lotus Lanterns, a producer of whimsical night lights. -Refer to Table 11-7.What is the marginal cost per unit of production when the firm produces 100 lanterns?

Correct AnswerverifiedShow Answer

The average total cost of production

Correct AnswerverifiedShow Answer

Increases in the marginal product of labor result from

Correct AnswerverifiedShow Answer

State the law of diminishing marginal returns.

Correct AnswerverifiedAs more units of a variable in...View AnswerShow Answer

Correct Answerverifieda.$121,000 = 40,000 (labor)+ 15,000 (mat...View AnswerShow Answer

Minimum efficient scale is defined as the level of output at which the short-run average total cost stops decreasing.

Correct AnswerverifiedShow Answer

Figure 11-6 Figure 11-6 contains information about the short run cost structure of a firm. -Refer to Figure 11-6.In the figure above which letter represents the average variable cost curve?

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Vipsana's Gyros House sells gyros.The cost of ingredients (pita,meat,spices,etc.) to make a gyro is $2.00.Vipsana pays her employees $60 per day.She also incurs a fixed cost of $120 per day.Calculate Vipsana's total cost per day when she produces 50 gyros using two workers?

Correct AnswerverifiedShow Answer

The marginal product of labor is defined as

Correct AnswerverifiedShow Answer

Diseconomies of scale occur when

Correct AnswerverifiedShow Answer

Which of the following statements best describes the economic short run?

Correct AnswerverifiedShow Answer

Which of the following statements is false?

Correct AnswerverifiedShow Answer

If marginal product is equal to average product,then total product is at a maximum.

Correct AnswerverifiedShow Answer

Which of the following is a reason why a firm would experience diseconomies of scale?

Correct AnswerverifiedShow Answer

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For many firms,the cost of utilities can...
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Explicit costs are costs that involve sp...
View Answer

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Correct Answer
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As more units of a variable in...
View Answer

Correct Answer
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a.$121,000 = 40,000 (labor)+ 15,000 (mat...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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