Question 1

In general,economic profits are:

Accepted Answer

A)   greater than accounting profits.
B)   less than accounting profits.
C)   the same as accounting profits.
D)   not comparable to accounting profits.E) A) and B)
F) B) and D)

Question 2

When accounting profits are positive,economic profits could be:

Accepted Answer

A)   positive.
B)   negative.
C)   zero.
D)   All of these are possible.E) A) and D)
F) B) and C)

Question 3

Suppose Chip's Chips produces bags of potato chips that sell for $3 a bag.What was the total revenue for Chip's Chips?

Accepted Answer

A)   Cannot answer this question without knowing the cost per bag.
B)   Cannot answer this question without knowing the quantity of bags sold.
C)   Cannot answer this question without knowing the cost per bag and the quantity of bags sold.
D)   Cannot answer this question without knowing what market share they hold.E) B) and C)
F) A) and D)

Question 4

Total revenue is:

Accepted Answer

A)   cost multiplied by quantity of each item produced.
B)   price multiplied by quantity subtracted from total cost.
C)   price multiplied by quantity of each item sold.
D)   None of these is true.E) A) and C)
F) B) and D)

Question 5

The additional output produced by adding one more unit of an input is the:

Accepted Answer

A)   marginal product.
B)   average product.
C)   total production.
D)   slope of the marginal product curve.E) All of the above
F) C) and D)

Question 6

Total cost includes:

Accepted Answer

A)   one-time expenses and ongoing expenses.
B)   one-time expenses, but not ongoing expenses.
C)   only ongoing expenses, not one-time expenses.
D)   only expenses that are variable.E) B) and C)
F) All of the above

Question 7

Suppose Bev's Bags makes two kinds of handbags-large and small.Bev rents an industrial space where she keeps the fabric,the industrial sewing machine,her measuring board and cutting shears,extra needles,thread and buttons,and labels.Bev can produce three bags an hour,regardless of the size of bag.Which of the following would be considered a fixed cost of this company?

Accepted Answer

A)   The rent Bev pays
B)   The fabric
C)   The sewing thread
D)   None of these would be considered a fixed cost.E) None of the above
F) A) and D)

Question 8

When marginal product __________ average product,average product must be ______________.

Accepted Answer

A)   is greater than; increasing
B)   is greater than; decreasing
C)   is less than; increasing
D)   Any of these is possible.E) None of the above
F) B) and D)

Question 9

Total cost includes:

Accepted Answer

A)   one-time expenses and ongoing expenses.
B)   forgone opportunity costs.
C)   the amount the firm spends on all inputs that go into the production of a good or service.
D)   All of these are true.E) All of the above
F) A) and B)

Question 10

How long is the long run?

Accepted Answer

A)   A defined, set period of time, usually a year
B)   However long it would take a firm to vary all of its costs
C)   However long it would take a firm to have at least one variable cost
D)   None of these defines the long run.E) None of the above
F) All of the above

Question 11

Suppose Sam's Shoe Co.makes only one kind of shoe,which sells for $50 a pair.If they sold 500,000 pairs of shoes,and had a total cost of $1,000,000,what was the company's profit?

Accepted Answer

A)   $1,500,000
B)   $24,000,000
C)   $40,000,000
D)   Not enough information is given to calculate profit.E) None of the above
F) All of the above

Question 12

An example of a one-time expense for a shoe factory would be buying:

Accepted Answer

A)   a sewing machine, and would be included in total cost.
B)   a sewing machine, and would be excluded from total cost.
C)   leather to make the shoes, and would be included in total cost.
D)   leather to make the shoes, and would be excluded from total cost.E) B) and C)
F) B) and D)

Question 13

The slope of the total production curve becomes:

Accepted Answer

A)   steeper when marginal product decreases.
B)   flatter when marginal product decreases.
C)   negative when marginal product decreases.
D)   None of these is true.E) C) and D)
F) B) and D)

Question 14

Explicit costs include:

Accepted Answer

A)   out-of-pocket costs.
B)   fixed costs.
C)   variable costs.
D)   All of these are included in explicit costs.E) A) and D)
F) B) and D)

Question 15

In the long run,when an increase in the quantity of output decreases average total cost,this is called:

Accepted Answer

A)   economies of scale.
B)   diseconomies of scale.
C)   constant economies to scale.
D)   minimum average total cost.E) A) and B)
F) A) and C)

Question 16

The principle that states the marginal product of an input decreases as the quantity of the input increases is called:

Accepted Answer

A)   diminishing marginal product.
B)   increasing rate of return.
C)   production function.
D)   total product optimization.E) B) and C)
F) None of the above

Question 17

The total cost curve:

Accepted Answer

A)   is the sum of the variable cost curve and fixed cost curve.
B)   is parallel to the variable cost curve.
C)   is always above the variable cost curve.
D)   All of these are true.E) C) and D)
F) B) and D)

Question 18

Suppose Chip's Chips produces bags of potato chips that sell for $3 a bag.If they sold 12,000 bags and incurred total costs of $30,000,what was the company's profit?

Accepted Answer

A)   $6,000
B)   $42,000
C)   $36,000
D)   $18,000E) A) and D)
F) All of the above

Question 19

Total costs:

Accepted Answer

A)   are fixed costs plus variable costs.
B)   include explicit and implicit costs.
C)   increases as the firm increases output.
D)   All of these are true.E) C) and D)
F) All of the above

Question 20

Economists assume the central goal of any business is to:

Accepted Answer

A)   maximize revenues.
B)   minimize costs.
C)   maximize profit.
D)   maximize market share.E) None of the above
F) B) and C)

Exam 12: The Costs of Production

Correct Answer
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The principle that states the marginal product of an input decreases as the quantity of the input increases is called:

Correct Answer
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Total cost includes:

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Suppose Chip's Chips produces bags of potato chips that sell for $3 a bag.What was the total revenue for Chip's Chips?

Correct Answer
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When accounting profits are positive,economic profits could be:

Correct Answer
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Total revenue is:

Correct Answer
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Total cost includes:

Correct Answer
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How long is the long run?

Correct Answer
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An example of a one-time expense for a shoe factory would be buying:

Correct Answer
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Economists assume the central goal of any business is to:

Correct Answer
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When marginal product average product,average product must be ____.

Correct Answer
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The total cost curve:

Correct Answer
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The additional output produced by adding one more unit of an input is the:

Correct Answer
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Total costs:

Correct Answer
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The slope of the total production curve becomes:

Correct Answer
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In general,economic profits are:

Correct Answer
verified

Suppose Sam's Shoe Co.makes only one kind of shoe,which sells for $50 a pair.If they sold 500,000 pairs of shoes,and had a total cost of $1,000,000,what was the company's profit?

Correct Answer
verified

Explicit costs include:

Correct Answer
verified

In the long run,when an increase in the quantity of output decreases average total cost,this is called:

Correct Answer
verified

Suppose Chip's Chips produces bags of potato chips that sell for $3 a bag.If they sold 12,000 bags and incurred total costs of $30,000,what was the company's profit?

Correct Answer
verified

Exam 12: The Costs of Production

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The principle that states the marginal product of an input decreases as the quantity of the input increases is called:

Correct AnswerverifiedShow Answer

Total cost includes:

Correct AnswerverifiedShow Answer

Suppose Chip's Chips produces bags of potato chips that sell for $3 a bag.What was the total revenue for Chip's Chips?

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When accounting profits are positive,economic profits could be:

Correct AnswerverifiedShow Answer

Total revenue is:

Correct AnswerverifiedShow Answer

Total cost includes:

Correct AnswerverifiedShow Answer

How long is the long run?

Correct AnswerverifiedShow Answer

An example of a one-time expense for a shoe factory would be buying:

Correct AnswerverifiedShow Answer

Economists assume the central goal of any business is to:

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When marginal product __________ average product,average product must be ______________.

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The total cost curve:

Correct AnswerverifiedShow Answer

The additional output produced by adding one more unit of an input is the:

Correct AnswerverifiedShow Answer

Total costs:

Correct AnswerverifiedShow Answer

The slope of the total production curve becomes:

Correct AnswerverifiedShow Answer

In general,economic profits are:

Correct AnswerverifiedShow Answer

Suppose Sam's Shoe Co.makes only one kind of shoe,which sells for $50 a pair.If they sold 500,000 pairs of shoes,and had a total cost of $1,000,000,what was the company's profit?

Correct AnswerverifiedShow Answer

Explicit costs include:

Correct AnswerverifiedShow Answer

In the long run,when an increase in the quantity of output decreases average total cost,this is called:

Correct AnswerverifiedShow Answer

Suppose Chip's Chips produces bags of potato chips that sell for $3 a bag.If they sold 12,000 bags and incurred total costs of $30,000,what was the company's profit?

Correct AnswerverifiedShow Answer

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When marginal product average product,average product must be ____.

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