Econ Midterm 2 Past Quizzes

question

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

answer

explicit costs + implicit costs

question

An example of an opportunity cost that is also an implicit cost is

answer

the value of the business owner's time

question

A total-cost curve shows the relationship between the

answer

quantity of output produced and the total cost of production

question

Average total cost (ATC) is calculated as follows:

answer

ATC = (total cost)/(quantity of output)

question

Average total cost is increasing whenever

answer

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

answer

gets steeper as output increases

question

Diminishing marginal product suggests that

answer

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?

answer

2 houses

question

For a construction company that builds houses, which of the following costs would be a fixed cost?

answer

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

answer

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

answer

(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?

answer

$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?

answer

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

answer

37 units of output

question

Marcus sells 300 candy bars at $0.50 each. His total costs are $125. His profits are

answer

$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.

answer

(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

answer

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

answer

the marginal cost of one more glass of lemonade is smaller than if output were high

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Total cost is the

answer

market value of the inputs a firm uses in production

question

Total revenue equals

answer

price x quantity

question

When the marginal product of an input declines as the quantity of that input increases, the production function exhibits

answer

diminishing marginal product

1 of 21

question

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

answer

explicit costs + implicit costs

question

An example of an opportunity cost that is also an implicit cost is

answer

the value of the business owner's time

question

A total-cost curve shows the relationship between the

answer

quantity of output produced and the total cost of production

question

Average total cost (ATC) is calculated as follows:

answer

ATC = (total cost)/(quantity of output)

question

Average total cost is increasing whenever

answer

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

answer

gets steeper as output increases

question

Diminishing marginal product suggests that

answer

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?

answer

2 houses

question

For a construction company that builds houses, which of the following costs would be a fixed cost?

answer

question

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

answer

production function

question

answer

(iii) and (iv) only

question

answer

$4,000

question

answer

38 bouquets

question

answer

37 units of output

question

Marcus sells 300 candy bars at $0.50 each. His total costs are $125. His profits are

answer

$25

question

answer

(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

answer

labor to be variable and capital to be fixed

question

answer

the marginal cost of one more glass of lemonade is smaller than if output were high

question

Total cost is the

answer

market value of the inputs a firm uses in production

question

Total revenue equals

answer

price x quantity

question

When the marginal product of an input declines as the quantity of that input increases, the production function exhibits

answer

diminishing marginal product

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Econ Midterm 2 Past Quizzes

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