Econ Midterm 2 Past Quizzes - Custom Scholars
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# Econ Midterm 2 Past Quizzes

question
A firm's opportunity costs of production are equal to its
explicit costs + implicit costs
question
An example of an opportunity cost that is also an implicit cost is
the value of the business owner's time
question
A total-cost curve shows the relationship between the
quantity of output produced and the total cost of production
question
Average total cost (ATC) is calculated as follows:
ATC = (total cost)/(quantity of output)
question
Average total cost is increasing whenever
marginal cost is greater than average total cost
question
David's firm experiences diminishing marginal product for all ranges of inputs. The total cost curve associated with David's firm
gets steeper as output increases
question
Diminishing marginal product suggests that
marginal cost is upward sloping
question
Eldin is a house painter. He can paint three houses per week. He is considering hiring his friend Murphy. Together, Eldin and Murphy can paint five houses per week. What is Murphy's marginal product?
2 houses
question
For a construction company that builds houses, which of the following costs would be a fixed cost?
the \$50,000 per year salary paid to a construction foreman
the \$30,000 per year salary paid to the company's bookkeeper
the \$10,000 per year premium paid to an insurance company
All of the above are correct
question
For a firm, the relationship between the quantity of inputs and quantity of output is called the
production function
question
Frank owns a dog-grooming business. Which of the following costs would be implicit costs?
(i)
dog shampoo
(ii)
rent on the storefront
(iii)
wages Frank could earn as a substitute elementary-school teacher
(iv)
interest that Frank's money was earning before he spent his savings to set up the dog-grooming business
(iii) and (iv) only
question
Jacqui decides to open her own business and earns \$50,000 in accounting profit the first year. When deciding to open her own business, she withdrew \$20,000 from her savings, which earned 5 percent interest. She also turned down three separate job offers with annual salaries of \$30,000, \$40,000, and \$45,000. What is Jacqui's economic profit from running her own business?
\$4,000
question
Kate is a florist. Kate can arrange 20 bouquets per day. She is considering hiring her husband William to work for her. William can arrange 18 bouquets per day. What would be the total daily output of Kate's firm if she hired her husband?
38 bouquets
question
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=6,Q=147) and (L=7,Q=184). The marginal product of the seventh worker is
37 units of output
question
Marcus sells 300 candy bars at \$0.50 each. His total costs are \$125. His profits are
\$25
question
Sonia opened a yoga studio where she teaches classes and sells yoga clothing. Fixed costs for Sonia's yoga studio include the cost of the
(i)
tank tops.
(ii)
wages paid to the other yoga instructors.
(iii)
lease on the studio space.
(iv)
insurance that the landlord requires Sonia to carry for the studio.
(iii) and (iv) only
question
Suppose that Christine owns her own CPA firm. She uses only two inputs in her business: her hours worked (labor) and a computer (capital). In the short run, Christine most likely considers
labor to be variable and capital to be fixed
question
Thirsty Thelma owns and operates a small lemonade stand. When Thelma is producing a low quantity of lemonade she has few workers and her equipment is not being fully utilized. Because she can easily put her idle resources to use
the marginal cost of one more glass of lemonade is smaller than if output were high
question
Total cost is the
market value of the inputs a firm uses in production
question
Total revenue equals
price x quantity
question
When the marginal product of an input declines as the quantity of that input increases, the production function exhibits
diminishing marginal product
1 of 21
question
A firm's opportunity costs of production are equal to its
explicit costs + implicit costs
question
An example of an opportunity cost that is also an implicit cost is
the value of the business owner's time
question
A total-cost curve shows the relationship between the
quantity of output produced and the total cost of production
question
Average total cost (ATC) is calculated as follows:
ATC = (total cost)/(quantity of output)
question
Average total cost is increasing whenever
marginal cost is greater than average total cost
question
David's firm experiences diminishing marginal product for all ranges of inputs. The total cost curve associated with David's firm
gets steeper as output increases
question
Diminishing marginal product suggests that
marginal cost is upward sloping
question
Eldin is a house painter. He can paint three houses per week. He is considering hiring his friend Murphy. Together, Eldin and Murphy can paint five houses per week. What is Murphy's marginal product?
2 houses
question
For a construction company that builds houses, which of the following costs would be a fixed cost?
the \$50,000 per year salary paid to a construction foreman
the \$30,000 per year salary paid to the company's bookkeeper
the \$10,000 per year premium paid to an insurance company
All of the above are correct
question
For a firm, the relationship between the quantity of inputs and quantity of output is called the
production function
question
Frank owns a dog-grooming business. Which of the following costs would be implicit costs?
(i)
dog shampoo
(ii)
rent on the storefront
(iii)
wages Frank could earn as a substitute elementary-school teacher
(iv)
interest that Frank's money was earning before he spent his savings to set up the dog-grooming business
(iii) and (iv) only
question
Jacqui decides to open her own business and earns \$50,000 in accounting profit the first year. When deciding to open her own business, she withdrew \$20,000 from her savings, which earned 5 percent interest. She also turned down three separate job offers with annual salaries of \$30,000, \$40,000, and \$45,000. What is Jacqui's economic profit from running her own business?
\$4,000
question
Kate is a florist. Kate can arrange 20 bouquets per day. She is considering hiring her husband William to work for her. William can arrange 18 bouquets per day. What would be the total daily output of Kate's firm if she hired her husband?
38 bouquets
question
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=6,Q=147) and (L=7,Q=184). The marginal product of the seventh worker is
37 units of output
question
Marcus sells 300 candy bars at \$0.50 each. His total costs are \$125. His profits are
\$25
question
Sonia opened a yoga studio where she teaches classes and sells yoga clothing. Fixed costs for Sonia's yoga studio include the cost of the
(i)
tank tops.
(ii)
wages paid to the other yoga instructors.
(iii)
lease on the studio space.
(iv)
insurance that the landlord requires Sonia to carry for the studio.
(iii) and (iv) only
question
Suppose that Christine owns her own CPA firm. She uses only two inputs in her business: her hours worked (labor) and a computer (capital). In the short run, Christine most likely considers
labor to be variable and capital to be fixed
question
Thirsty Thelma owns and operates a small lemonade stand. When Thelma is producing a low quantity of lemonade she has few workers and her equipment is not being fully utilized. Because she can easily put her idle resources to use
the marginal cost of one more glass of lemonade is smaller than if output were high
question
Total cost is the
market value of the inputs a firm uses in production
question
Total revenue equals
price x quantity
question
When the marginal product of an input declines as the quantity of that input increases, the production function exhibits
diminishing marginal product

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