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Exam 12: The Costs of Production

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Question 111

Multiple Choice

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Implicit costs

A) do not require an outlay of money by the firm.
B) do not enter into the economist's measurement of a firm's profit.
C) are also known as variable costs.
D) are not part of an economist's measurement of opportunity cost.

E) A) and B)
F) A) and C)

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Question 112

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Figure 12-5 -Refer to Figure 12-5.Which curve is most likely to represent average total cost?

A) A
B) B
C) C
D) D

E) A) and C)
F) A) and B)

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Question 113

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The average-fixed-cost curve is constant.

When a firm is operating at an efficient scale,

Suppose that for a particular business there are no implicit costs.Then

Table 12-12 Betty's Bakery -Refer to Table 12-12.What is the average fixed cost of producing 8 cakes at Betty's Bakery?

Average total cost tells us the

The economic field of industrial organization examines how firms' decisions about prices and quantities depend on the market conditions they face.

Which of the following is not a property of a firm's cost curves?

Adam Smith's example of the pin factory demonstrates that economies of scale result from specialization.

Figure 12-4 -Refer to Figure 12-4.Which of the above marginal cost curves reflects diminishing marginal product?

Table 12-12 Betty's Bakery -Refer to Table 12-12.What is the marginal cost of the 2nd cake at Betty's Bakery?

Scenario 12-10 Walter builds birdhouses.He spends $5 on the materials for each birdhouse.He can build one in 30 minutes.He is semi-retired but earns $8 per hour at the local hardware store.He can sell a birdhouse for $20 each. -Refer to Scenario 12-10.An economist would calculate the total profit for one birdhouse to be

If marginal cost is greater than average total cost,then

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 = 132) .Then the marginal product of the 13th worker is

A second or third worker may have a higher marginal product than the first worker in certain circumstances.

Table 12-11 Teacher's Helper is a small company that has a subcontract to produce instructional materials for disabled children in public school districts.The owner rents several small rooms in an office building in the suburbs for $600 a month and has leased computer equipment that costs $480 a month. -Refer to Table 12-11.One month,Teacher's Helper produced 18 instructional modules.What was the average fixed cost for that month?

Consider the following information about bread production at Beth's Bakery: Beth pays all her workers the same wage,and labor is her only variable cost.From this information we can conclude that Beth's marginal cost

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

Several related measures of cost can be derived from a firm's total cost.