Chapter 13 MC Section 13The Costs of Production.docx

Chapter 13 MC Section 13The Costs of Production.docx

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Chapter13MCSection13TheCostsofProduction

Chapter13

TheCostsofProduction

MultipleChoice

1.Accordingtothelawofsupply,

a.firms'productionlevelsarenotcorrelatedwiththepriceofagood.

b.thesupplycurvewillslopedownwardwhendemanddecreases.

c.firmsarewillingtoproduceagreaterquantityofagoodwhenthepriceofthegoodishigher.

d.thesupplycurveidentifiesthepointswherethefirmminimizesitsmarginalcosts.

2.Economistsnormallyassumethatthegoalofafirmisto

（i）makeprofitaslargeaspossibleevenifitmeansreducingoutput.

（ii）makeprofitaslargeaspossibleevenifitmeansincurringahighertotalcost.

（iii）makerevenueaslargeaspossible.

a.（i）and（ii）aretrue.

b.（i）and（iii）aretrue.

c.（ii）and（iii）aretrue.

d.（i）,（ii）,and（iii）aretrue.

3.Economicprofitisequalto

a.totalrevenueminustheexplicitcostofproducinggoodsandservices.

b.totalrevenueminustheopportunitycostofproducinggoodsandservices.

c.totalrevenueminustheaccountingcostofproducinggoodsandservices.

d.averagerevenueminustheaveragecostofproducingthelastunitofagoodorservice.

Scenario13-1

Tonyisawheatfarmer,buthealsospendspartofhisdayteachingguitarlessons.Duetothepopularityofhislocalcountrywesternband,FarmerTonyhasmorestudentsrequestinglessonsthanhehastimeforifheistoalsomaintainhisfarmingbusiness.FarmerTonycharges$25anhourforhisguitarlessons.Onespringday,hespends10hoursinhisfieldsplanting$130worthofseedsonhisfarm.Heexpectsthattheseedsheplantedwillyield$300worthofwheat.

4.RefertoScenario13-1.WhatisthetotalopportunitycostofthedaythatFarmerTonyincurredforhisspringdayinthefieldplantingwheat?

a.$130

b.$250

c.$300

d.$380

5.RefertoScenario13-1.Tony'saccountantwouldmostlikelyfigurethetotalcostofhiswheatplantingtoequal

a.$25

b.$130

c.$300

d.$380

6.RefertoScenario13-1.Tony'saccountingprofitequals

a.$-80

b.$130

c.$170

d.$260

7.RefertoScenario13-1.Tony'seconomicprofitequals

a.$-130

b.$-80

c.$130

d.$170

8.Thedifferencebetweenaccountingprofitandeconomicprofitrelatesto

a.themannerinwhichrevenuesaredefined.

b.howtotalrevenueiscalculated.

c.themannerinwhichcostsaredefined.

d.thepriceofthegoodinthemarket.

9.Whenaddinganotherunitoflaborleadstoanincreaseinoutputthatissmallerthantheincreasesinoutputthatresultedfromaddingpreviousunitsoflabor,wehavethepropertyof

a.diminishinglabor.

b.diminishingoutput.

c.diminishingmarginalproduct.

d.negativemarginalproduct.

10.Whichofthefollowingstatementsaboutaproductionfunctioniscorrectforafirmthatuseslabortoproduceoutput?

a.Theproductionfunctiondepictstherelationshipbetweenthequantityoflaborandthequantityofoutput.

b.Theslopeoftheproductionfunctionmeasuresmarginalcost.

c.Thequantityofoutputdeterminesthemaximumamountoflaborthefirmwillhire.

d.Alloftheabovearecorrect.

11.Forafirm,therelationshipbetweenthequantityofinputsandquantityofoutputiscalledthe

a.profitfunction.

b.productionfunction.

c.total-costfunction.

d.quantityfunction.

12.Supposeacertainfirmisabletoproduce165unitsofoutputperdaywhen15workersarehired.Thefirmisabletoproduce176unitsofoutputperdaywhen16workersarehired（holdingotherinputsfixed）.Thenthemarginalproductofthe16thworkeris

a.10unitsofoutput.

b.11unitsofoutput.

c.16unitsofoutput.

d.176unitsofoutput.

Table13-1

NumberofWorkers

Output

0

    0

1

  50

2

110

3

180

4

260

5

330

13.RefertoTable13-1.Whatisthemarginalproductofthefourthworker?

a.65

b.70

c.75

d.80

14.RefertoTable13-1.Atwhichnumberofworkersdoesdiminishingmarginalproductbegin?

a.2

b.3

c.4

d.5

15.Whenthemarginalproductofaninputdeclinesasthequantityofthatinputincreases,theproductionfunctionexhibits

a.increasingreturnstoscale.

b.decreasingreturnstoscale.

c.diminishingtotalproduct.

d.diminishingmarginalproduct.

16.Thetotalcostcurvegetssteeperasoutputincreasesdueto

a.diseconomiesofscale.

b.economiesofscale.

c.diminishingmarginalproduct.

d.increasingreturnstoscale.

17.SupposeJanstartedupasmalllemonadestandbusinesslastmonth.VariablecostsforJan'slemonadestandnowincludethecostof

a.buildingthelemonadestand.

b.hiringanartisttodesignalogoforhersign.

c.lemonademix.

d.Alloftheabovearecorrect.

18.Theamountbywhichtotalcostriseswhenthefirmproducesoneadditionalunitofoutputiscalled

a.averagecost.

b.marginalcost.

c.fixedcost.

d.variablecost.

19.Marginalcostequals

a.totalcostdividedbyquantityofoutputproduced.

b.totaloutputdividedbythechangeintotalcost.

c.theslopeofthetotalcostcurve.

d.theslopeofthelinedrawnfromtheorigintothetotalcostcurve.

20.Diminishingmarginalproductsuggeststhatthemarginal

a.costofanextraworkerisunchanged.

b.costofanextraworkerislessthanthepreviousworker'smarginalcost.

c.productofanextraworkerislessthanthepreviousworker'smarginalproduct.

d.productofanextraworkerisgreaterthanthepreviousworker'smarginalproduct.

21.Whenmarginalcostislessthanaveragetotalcost,

a.marginalcostmustbefalling.

b.averagevariablecostmustbefalling.

c.averagetotalcostisfalling.

d.averagetotalcostisrising.

22.Marginalcostisequaltoaveragetotalcostwhen

a.averagevariablecostisfalling.

b.averagefixedcostisrising.

c.marginalcostisatitsminimum.

d.averagetotalcostisatitsminimum.

Figure13-1

23.RefertoFigure13-1.Whichofthefollowingcanbeinferredfromthefigureabove?

（i）Marginalcostisincreasingatalllevelsofoutput.

（ii）Marginalproductisincreasingatlowlevelsofoutput.

（iii）Marginalproductisdecreasingathighlevelsofoutput.

a.（i）and（ii）

b.（ii）and（iii）

c.（i）and（iii）

d.（ii）only

24.Totalcostcanbedividedintotwotypesofcosts.Thosetwotypesare

a.fixedcostsandvariablecosts.

b.fixedcostsandmarginalcosts.

c.variablecostsandmarginalcosts.

d.averagecostsandmarginalcosts.

25.Averagetotalcost（ATC）iscalculatedasfollows:

a.ATC=（changeintotalcost）/（changeinquantityofoutput）.

b.ATC=（changeintotalcost）/（changeinquantityofinput）.

c.ATC=totalcost/quantityofoutput.

d.ATC=totalcost/quantityofinput.

26.Intheshortrun,afirmincursfixedcosts

a.onlyifitincursvariablecosts.

b.onlyifitproducesnooutput.

c.onlyifitproducesapositivequantityofoutput.

d.whetheritproducesoutputornot.

Figure13-2

27.RefertoFigure13-2.Whichofthefiguresrepresentsthetotalcostcurveforafirm?

a.Figure1

b.Figure2

c.Figure3

d.Figure4

28.RefertoFigure13-2.Whichofthefiguresrepresentsthemarginalcostcurveforafirm?

a.Figure1

b.Figure2

c.Figure3

d.Figure4

29.RefertoFigure13-2.Whichofthefiguresrepresentstheproductionfunctionforafirm?

a.Figure1

b.Figure2

c.Figure3

d.Figure4

30.Whichofthefollowingstatementsaboutcostsiscorrect?

a.Whenmarginalcostislessthanaveragetotalcost,averagetotalcostisrising.

b.ThetotalcostcurveisU-shaped.

c.Asthequantityofoutputincreases,marginalcosteventuallyrises.

d.Alloftheabovearecorrect.

31.Thefirm'sefficientscaleisthequantityofoutputthatminimizes

a.averagetotalcost.

b.averagefixedcost.

c.averagevariablecost.

d.marginalcost.

32.Atwhatlevelofoutputwillaveragevariablecostequalaveragetotalcost?

a.Whenmarginalcostequalsaveragetotalcost

b.Foralllevelsofoutputinwhichaveragevariablecostisfalling

c.Whenmarginalcostequalsaveragevariablecost

d.Thereisnolevelofoutputwherethisoccurs,aslongasfixedcostsarepositive.

33.Whenafirmisabletoputidleequipmenttousebyhiringanotherworker,

a.variablecostswillrise.

b.variablecostswillfall.

c.fixedcostswillfall.

d.fixedcostsandvariablecostswillrise.

34.Whenmarginalcostisrising,averagevariablecost

a.mustberising.

b.mustbefalling.

c.mustbeconstant.

d.couldberisingorfalling.

35.Supposethatforaparticularfirmtheonlyvariableinputintotheproductionprocessislaborandthatoutputequalszerowhennoworkersarehired.Inaddition,supposethatmarginalcostwhenthreeworkersarehiredis$40andtheaveragetotalcostwhenthreeworkersarehiredis$50.Whatisthetotalcostofproductionwhenthreeworkersarehired?

a.$50

b.$90

c.$120

d.$150

36.Whenmarginalcostisgreaterthanaveragecost,averagecostis

a.rising.

b.falling.

c.constant.

d.eitherrisingorfallingdependingontheeconomiesofscale.

37.Whichofthefollowingisnotapropertyofafirm'scostcurves?

a.Marginalcostmusteventuallyriseasaresultofdiminishingmarginalproduct.

b.AveragetotalcostisU-shaped.

c.Economiesofscalewillexistwhenaveragetotalcostfallsasoutputrises.

d.Averagetotalcostwillcrossmarginalcostattheminimumofmarginalcost.

38.MillerTechnologieshasaveragevariablecostsof$1andaveragetotalcostsof$3whenitproduces500unitsofoutput.Thefirm'stotalfixedcostsequal

a.$500

b.$1,000

c.$1,500

d.$2,000

39.Giventhecostcurvesshowninthediagrambelow,theefficientscaleofproductionoccursatpoint

a.A.

b.B.

c.C.

d.D.

40.Thelengthoftheshortrun

a.isdifferentfordiffe