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Chapter 13 - The Costs of Production - Test B

This document contains 8 multiple choice questions that test concepts related to costs of production. The questions cover topics such as computing profits, defining economic profit, diminishing marginal product, and characteristics of average fixed cost, average total cost, average variable cost, and marginal cost curves. Correct answers are provided for each question.

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minh le
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358 views2 pages

Chapter 13 - The Costs of Production - Test B

This document contains 8 multiple choice questions that test concepts related to costs of production. The questions cover topics such as computing profits, defining economic profit, diminishing marginal product, and characteristics of average fixed cost, average total cost, average variable cost, and marginal cost curves. Correct answers are provided for each question.

Uploaded by

minh le
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Chapter 13: The Costs of Production

Test B
1. Susan’s firm produces 2,000 beach towels and sells them for $10 each. Her total cost
of producing these towels is $10,000. Her total profits
a. are $30,000.
b. are $20,000.
c. are $10,000.
d. cannot be computed from the information provided.
ANSWER: c. are $10,000.

2. A firm’s economic profit is equal to revenue less


a. explicit costs.
b. implicit costs.
c. money costs.
d. total opportunity costs.
ANSWER: d. total opportunity costs.

3. Marginal product will be positive and diminishing if the production function slopes
a. downward and becomes flatter as more workers are hired.
b. downward and becomes steeper as more workers are hired.
c. upward and becomes flatter as more workers are hired.
d. upward and becomes steeper as more workers are hired.
ANSWER: c. upward and becomes flatter as more workers are hired.

4. Diminishing marginal product occurs


a. as additional workers have to share existing equipment and space.
b. as additional workers expect greater hourly wages than previous workers.
c. both a and b are correct
d. neither a nor b is correct
ANSWER: a. as additional workers have to share existing equipment and space.

5. The marginal cost of producing the third beach umbrella is:

Output Total Cost


0 $10,000
1 $10,050
2 $10,075
3 $10,100
4 $10,150
5 $10,250
6 $10,400
a. $3,366.66.
b. $33.33.
c. $50.
d. $25.
ANSWER: d. $25.

6. It costs a firm $4,400 to produce 23 units and $4,800 to produce 24 units If they are
currently producing 24 units, their average total cost
a. and marginal cost are $200.
b. is $200 and their marginal cost is $400.
c. is $400 and their marginal cost is $200.
d. and their marginal cost is $400.
ANSWER: b. is $200 and their marginal cost is $400.

7. Sandy produces umbrellas. Her current production is 300 a month. Her average fixed
cost is $2. Her average variable cost is $5. It follows that her total cost is
a. $600.
b. $900.
c. $1,500.
d. $2,100.
ANSWER: d. $2,100.

8. Which of the following cost curves would not typically fall and then rise as output
increases?
a. AFC
b. ATC
c. AVC
d. MC
ANSWER: a. AFC

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