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Exam 13: The Costs of Production

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Question 101

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Diseconomies of scale occur when a firm's

A) marginal costs are constant as output increases.
B) long-run average total costs are decreasing as output increases.
C) long-run average total costs are increasing as output increases.
D) marginal costs are equal to average total costs for all levels of output.

E) C) and D)
F) A) and D)

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Question 102

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Economists assume that the goal of the firm is to maximize total

A) revenue.
B) profits.
C) costs.
D) satisfaction.

E) A) and B)
F) All of the above

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Question 103

Multiple Choice

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

Diminishing marginal product exists when the total cost curve becomes horizontal as outputs increases.

Scenario 13-19 Doreen's Dairy produces and sells Swiss cheese. Last year, it produced 7,000 pounds and sold each pound for $6. In producing the 7,000 pounds, the dairy incurred variable costs of $28,000 and a total cost of $40,000. -Refer to Scenario 13-19. In producing the 7,000 pounds of cheese, the firm's average fixed cost was

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

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

Figure 13-2 -Refer to Figure 13-2. As the number of workers increases,

Suppose that a firm's long-run average total costs of producing an individual income tax return is $75 when it produces 1,000 returns and $75 when it produces 1,200 returns. For this range of output, the firm is experiencing

Table 13-10 -Refer to Table 13-10. The average variable cost of producing 240 units of output is

David's firm experiences diminishing marginal product for all ranges of inputs. The total cost curve associated with David's firm

Table 13-17 Consider the following table of long-run total cost for four different firms: -Refer to Table 13-17. Which firm has constant returns to scale over the entire range of output?

Table 13-7 The Flying Elvis Copter Rides -Refer to Table 13-7. What is the value of J?

The difference between accounting profit and economic profit relates to

Describe the relationship between average variable cost and average total cost. How are the general shapes of the AVC and ATC curves related?

Bev is opening her own court-reporting business. She financed the business by withdrawing money from her personal savings account. When she closed the account, the bank representative mentioned that she would have earned $300 in interest next year. If Bev hadn't opened her own business, she would have earned a salary of $25,000. In her first year, Bev's revenues were $30,000, and she spent $1,000 on materials and supplies. Which of the following statements is correct?

​Chloe's Café sells gourmet cinnamon rolls. In the long run, the café incurs a total cost of $500 to produce 1,000 cinnamon rolls. If Chloe's Café exhibits economies of scale between 1,000 and 2,000 cinnamon rolls, the long-run average total cost for 1,500 cinnamon rolls is

A production function describes

Suppose Jan started up a small lemonade stand business last month. Variable costs for Jan's lemonade stand now include the cost of

Table 13-14 -Refer to Table 13-14. What is the marginal cost of the 8th unit of output?