ECO Quiz 11

question

Sebastian decides to open a tree farm. When deciding to open his own business, he turned down two separate job offers of $25,000 and $30,000 and withdrew $20,000 from his savings. Sebastian's savings account paid 3 percent interest. He also borrowed $20,000 from his brother, whom he pays 2 percent interest per year. He spent $15,000 to purchase supplies and earned $50,000 in revenue during his first year. Which of the following statements is correct?

answer

Sebastian's total explicit costs are $15,400.

question

The long-run average total cost curve is always

answer

flatter than the short-run average total cost curve, but not necessarily horizontal.

question

Refer to Table 13-1. What is total output when 3 workers are hired?

answer

135

question

Profit is defined as

answer

total revenue minus total cost

question

answer

Sebastian's economic profit is $4,000, and his accounting profit is $34,600.

question

Refer to Table 13-2. What is the marginal product of the first worker?

answer

300 units

question

Explicit costs

answer

require an outlay of money by the firm.

question

The nature of a firm's cost (fixed or variable) depends on the

answer

time horizon under consideration.

question

Economists normally assume that the goal of a firm is to
(i)
sell as much of its product as possible.
(ii)
set the price of the product as high as possible.
(iii)
maximize profit.

answer

(iii) only

question

Refer to Table 13-2. What is the marginal product of the third worker?

answer

100 units

question

For a firm, the relationship between the quantity of inputs and quantity of output is called the

answer

production function.

question

An entrepreneur's motivation to start a business arises from

answer

All of the above could be correct.

question

Katherine gives piano lessons for $15 per hour. She also grows flowers, which she arranges and sells at the local farmer's market. One day she spends 5 hours planting $50 worth of seeds in her garden. Once the seeds have grown into flowers, she can sell them for $150 at the farmer's market. Katherine's accounting profits are

answer

$100, and her economic profits are $25.

question

Industrial organization is the study of

answer

how firms' decisions regarding prices and quantities depend on the market conditions they face.

question

Patrice owns a travel agency. Her accountant most likely includes which of the following costs on her financial statements?

answer

the cost of utilities for operating the storefront

question

Total revenue equals

answer

price x quantity.

question

The figure below depicts average total cost functions for a firm that produces automobiles.
Refer to Figure 13-9. At levels of output between M and N, the firm experiences

answer

constant returns to scale.

question

A firm's opportunity costs of production are equal to its

answer

explicit costs + implicit costs.

question

The length of the short run

answer

is different for different types of firms.

question

Refer to Figure 13-3. The changing slope of the total cost curve reflects

answer

decreasing marginal product.

question

Refer to Figure 13-3. Assuming that the firm depicted produces cookies, which of the statements below is most consistent with the shape of the total cost curve?

answer

Producing an additional cookie is always more costly than producing the previous cookie.

question

Refer to Table 13-2. What is the marginal product of the fourth worker?

answer

50 units

question

Refer to Table 13-1. What is total output when 2 workers are hired?

answer

question

Total revenue equals

answer

price x quantity.

question

The figure below depicts average total cost functions for a firm that produces automobiles.
Refer to Figure 13-9. Which curve represents the long-run average total cost?

answer

ATCD

question

Economies of scale occur when

answer

long-run average total costs fall as output increases.

question

A firm that wants to achieve economies of scale could do so by

answer

assigning limited tasks to its employees, so they can master those tasks.

question

Refer to Figure 13-3. Which of the following statements best captures the nature of the underlying production function (not pictured)?

answer

Output increases at a decreasing rate with additional units of input.

question

Economic profit

answer

will never exceed accounting profit.

question

Which of the following expressions is correct?

answer

Accounting Profit = Total Revenue - Explicit Costs

1 of 30

question

answer

Sebastian's total explicit costs are $15,400.

question

The long-run average total cost curve is always

answer

flatter than the short-run average total cost curve, but not necessarily horizontal.

question

Refer to Table 13-1. What is total output when 3 workers are hired?

answer

135

question

Profit is defined as

answer

total revenue minus total cost

question

answer

Sebastian's economic profit is $4,000, and his accounting profit is $34,600.

question

Refer to Table 13-2. What is the marginal product of the first worker?

answer

300 units

question

Explicit costs

answer

require an outlay of money by the firm.

question

The nature of a firm's cost (fixed or variable) depends on the

answer

time horizon under consideration.

question

Economists normally assume that the goal of a firm is to
(i)
sell as much of its product as possible.
(ii)
set the price of the product as high as possible.
(iii)
maximize profit.

answer

(iii) only

question

Refer to Table 13-2. What is the marginal product of the third worker?

answer

100 units

question

For a firm, the relationship between the quantity of inputs and quantity of output is called the

answer

production function.

question

An entrepreneur's motivation to start a business arises from

answer

All of the above could be correct.

question

answer

$100, and her economic profits are $25.

question

Industrial organization is the study of

answer

how firms' decisions regarding prices and quantities depend on the market conditions they face.

question

Patrice owns a travel agency. Her accountant most likely includes which of the following costs on her financial statements?

answer

the cost of utilities for operating the storefront

question

Total revenue equals

answer

price x quantity.

question

The figure below depicts average total cost functions for a firm that produces automobiles.
Refer to Figure 13-9. At levels of output between M and N, the firm experiences

answer

constant returns to scale.

question

A firm's opportunity costs of production are equal to its

answer

explicit costs + implicit costs.

question

The length of the short run

answer

is different for different types of firms.

question

Refer to Figure 13-3. The changing slope of the total cost curve reflects

answer

decreasing marginal product.

question

Refer to Figure 13-3. Assuming that the firm depicted produces cookies, which of the statements below is most consistent with the shape of the total cost curve?

answer

Producing an additional cookie is always more costly than producing the previous cookie.

question

Refer to Table 13-2. What is the marginal product of the fourth worker?

answer

50 units

question

Refer to Table 13-1. What is total output when 2 workers are hired?

answer

question

Total revenue equals

answer

price x quantity.

question

The figure below depicts average total cost functions for a firm that produces automobiles.
Refer to Figure 13-9. Which curve represents the long-run average total cost?

answer

ATCD

question

Economies of scale occur when

answer

long-run average total costs fall as output increases.

question

A firm that wants to achieve economies of scale could do so by

answer

assigning limited tasks to its employees, so they can master those tasks.

question

Refer to Figure 13-3. Which of the following statements best captures the nature of the underlying production function (not pictured)?

answer

Output increases at a decreasing rate with additional units of input.

question

Economic profit

answer

will never exceed accounting profit.

question

Which of the following expressions is correct?

answer

Accounting Profit = Total Revenue - Explicit Costs

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ECO Quiz 11

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