Solved Questions On Chapter 13
Solved Questions On Chapter 13
Solved Questions On Chapter 13
Chapter 13
The Costs of Production
MULTIPLE CHOICE
Figure 13-4
Cost
11
10
9
8
7
6
5
4
3
2
1
A
1
10
11
12 Quantity
139. Refer to Figure 13-4. Curve A represents which type of cost curve?
a. marginal cost
b. average total cost
c. average variable cost
d. average fixed cost
ANS: D
DIF:
LOC: Costs of production
MSC: Interpretive
REF:
TOP:
13-3
NAT: Analytic
Cost curves | Average fixed cost
140. Refer to Figure 13-4. Which of the curves is most likely to represent average fixed cost?
a. A
b. B
c. C
d. D
ANS: A
DIF:
LOC: Costs of production
MSC: Interpretive
REF:
TOP:
13-3
NAT: Analytic
Cost curves | Average fixed cost
141. Refer to Figure 13-4. Curve C represents which type of cost curve?
a. marginal cost
b. average total cost
c. average variable cost
d. average fixed cost
ANS: B
DIF:
LOC: Costs of production
MSC: Interpretive
REF:
TOP:
13-3
NAT: Analytic
Cost curves | Average total cost
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or distributed without the prior consent of the publisher.
REF:
TOP:
13-3
NAT: Analytic
Cost curves | Average total cost
143. Refer to Figure 13-4. Curve D represents which type of cost curve?
a. marginal cost
b. average total cost
c. average variable cost
d. average fixed cost
ANS: A
DIF:
LOC: Costs of production
MSC: Interpretive
REF:
TOP:
13-3
NAT: Analytic
Cost curves | Marginal cost
144. Refer to Figure 13-4. Which curve is most likely to represent marginal cost?
a. A
b. B
c. C
d. D
ANS: D
DIF:
LOC: Costs of production
MSC: Interpretive
REF:
TOP:
13-3
NAT: Analytic
Cost curves | Marginal cost
REF:
TOP:
13-3
NAT: Analytic
Cost curves | Marginal cost
REF:
TOP:
13-3
NAT: Analytic
Cost curves | Average fixed cost
REF:
TOP:
13-3
NAT: Analytic
Cost curves | Efficient scale
If Kelsey sells 300 glasses of lemonade at $0.50 each, her total revenues are
a. $150.
b. $299.50.
c. $300.
d. $600.
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or distributed without the prior consent of the publisher.
REF:
TOP:
13-1
Total revenue
NAT: Analytic
ANS: C
DIF:
LOC: Costs of production
MSC: Interpretive
REF:
TOP:
13-1
NAT: Analytic
Opportunity cost
(i) only
(ii) only
(ii) and (iii) only
(i) and (iii) only
ANS: A
DIF:
LOC: Costs of production
MSC: Interpretive
54.
REF:
TOP:
13-1
Implicit costs
NAT: Analytic
Suppose that for a particular business there are no implicit opportunity costs. Then
a. accounting profit will be greater than economic profit.
b. accounting profit will be the same as economic profit.
c. accounting profit will be less than economic profit.
d. the relationship between accounting profit and economic profit cannot be determined without more
information.
ANS: B
DIF:
LOC: Costs of production
MSC: Analytical
REF:
TOP:
13-1
NAT: Analytic
Accounting profit | Economic profit
ANS: A
DIF:
LOC: Costs of production
MSC: Definitional
22.
REF:
TOP:
13-2
NAT: Analytic
Production function
ANS: D
DIF:
LOC: Costs of production
MSC: Definitional
REF:
TOP:
13-2
NAT: Analytic
Marginal product
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or distributed without the prior consent of the publisher.
ANS: B
DIF:
LOC: Costs of production
MSC: Definitional
31.
REF:
TOP:
13-2
NAT: Analytic
Marginal product
On a 100-acre farm, a farmer is able to produce 3,000 bushels of wheat when he hires 2 workers. He is able to
produce 4,400 bushels of wheat when he hires 3 workers. Which of the following possibilities is consistent
with the property of diminishing marginal product?
a. The farmer is able to produce 5,600 bushels of wheat when he hires 4 workers.
b. The farmer is able to produce 5,800 bushels of wheat when he hires 4 workers.
c. The farmer is able to produce 6,000 bushels of wheat when he hires 4 workers.
d. Any of the above could be correct.
ANS: A
DIF:
LOC: Costs of production
MSC: Analytical
REF:
TOP:
13-2
NAT: Analytic
Diminishing marginal product
Table 13-4
Gallo Cork Factory
Number
of
Workers
1
2
3
4
5
6
7
45.
Number
of
Machines
2
2
2
2
2
2
2
Marginal
Product of
Labor
Cost of
Workers
Cost of
Machines
Total
Cost
Refer to Table 13-4. Each worker at Gallo's cork factory costs $12 per hour. The cost of each machine is $20
per day regardless of the number of corks produced. If Gallo's produces at a rate of 70 corks per hour and
operates 8 hours per day, what is Gallos total labor cost per day?
a. $72
b. $112
c. $576
d. $616
ANS: C
DIF:
LOC: Costs of production
MSC: Applicative
46.
Output
(corks
produced
per hour)
5
10
20
35
55
70
80
REF:
TOP:
13-2
Variable costs
NAT: Analytic
Refer to Table 13-4. Each worker at Gallo's cork factory costs $12 per hour. The cost of each machine is $20
per day regardless of the number of corks produced. What is the total daily cost of producing at a rate of 55
units per hour if Gallos operates 8 hours per day?
a. $480
b. $576
c. $520
d. $616
ANS: C
DIF:
LOC: Costs of production
REF:
TOP:
13-2
Total cost
NAT: Analytic
MSC: Applicative
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or distributed without the prior consent of the publisher.
Refer to Table 13-4. Each worker at Gallo's cork factory costs $12 per hour. The cost of each machine is $20
per day regardless of the number of corks produced. Assume the number of machines does not change. If
Gallo's produces at a rate of 78 corks per hour, what is the total machine cost per day?
a. $20
b. $40
c. $240
d. We are unable to determine total machine costs from the information given.
ANS: B
DIF:
LOC: Costs of production
48.
NAT: Analytic
MSC: Applicative
REF:
TOP:
13-2
Variable costs
NAT: Analytic
REF:
TOP:
13-2
NAT: Analytic
Marginal product
Refer to Table 13-4. Assume Gallo's currently employs 2 workers. What is the marginal product of labor
when Gallo's adds a 3rd worker?
a. 5 corks per hour
b. 10 corks per hour
c. 20 corks per hour
d. 25 corks per hour
ANS: B
DIF:
LOC: Costs of production
MSC: Applicative
51.
13-2
Fixed costs
Refer to Table 13-4. Assume Gallo's currently employs 5 workers. What is the marginal product of labor
when Gallo's adds a 6th worker?
a. 5 corks per hour
b. 15 corks per hour
c. 25 corks per hour
d. 70 corks per hour
ANS: B
DIF:
LOC: Costs of production
MSC: Applicative
50.
REF:
TOP:
Refer to Table 13-4. Each worker at Gallo's cork factory costs $12 per hour. The cost of each machine is $20
per day regardless of the number of corks produced. If Gallo's produces at a rate of 35 corks per hour, what is
the total labor cost per hour?
a. $40
b. $48
c. $384
d. $424
ANS: B
DIF:
LOC: Costs of production
MSC: Applicative
49.
REF:
TOP:
13-2
NAT: Analytic
Marginal product
Refer to Table 13-4. Gallo's cork factory experiences diminishing marginal product of labor with the addition
of which worker?
a. the third worker
b. the fourth worker
c. the fifth worker
d. the sixth worker
ANS: D
DIF:
LOC: Costs of production
MSC: Applicative
REF:
TOP:
13-2
NAT: Analytic
Marginal product
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or distributed without the prior consent of the publisher.
REF:
TOP:
13-3
NAT: Analytic
Average total cost
ANS: B
DIF:
LOC: Costs of production
MSC: Interpretive
REF:
TOP:
13-3
NAT: Analytic
Average total cost
10,000 tents. At that level of output, the firm's average total costs equal
a. $80
b. $90
c. $100
d. $110
ANS: D
DIF:
LOC: Costs of production
MSC: Applicative
30.
REF:
TOP:
13-3
NAT: Analytic
Average total cost
The Wacky Widget company has total fixed costs of $100,000 per year. The firm's average variable cost is $5
for 10,000 widgets. At that level of output, the firm's average total costs equal
a. $10
b. $15
c. $100
d. $150
ANS: B
DIF:
LOC: Costs of production
MSC: Applicative
47.
REF:
TOP:
13-3
NAT: Analytic
Average total cost
A firm has a fixed cost of $500 in its first year of operation. When the firm produces 100 units of output, its
total costs are $3,500. When it produces 101 units of output, its total costs are $3,750. What is the marginal
cost of producing the 101st unit of output?
a. $250
b. $275
c. $340.91
d. $350
ANS: A
DIF:
LOC: Costs of production
MSC: Analytical
REF:
TOP:
13-3
Marginal cost
NAT: Analytic
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or distributed without the prior consent of the publisher.
0
1
2
3
4
5
6
7
8
9
10
73.
Variable
Costs
Total
Cost
$1,080
$1,080
$ 400
$1,480
Marginal
Cost
$965
$400
$450
$2,430
$475
$216
$4,280
$4,100
$5,400
$7,300
$700
$135
$10,880
$980
REF:
TOP:
13-3
Marginal cost
NAT: Analytic
REF:
TOP:
13-3
NAT: Analytic
Average variable cost
Refer to Table 13-9. What is the average fixed cost for the month if 9 instructional modules are produced?
a. $108.00
b. $120.00
c. $150.00
d. $811.11
ANS: B
DIF:
LOC: Costs of production
MSC: Applicative
76.
Average
Total
Cost
Refer to Table 13-9. What is the average variable cost for the month if 6 instructional modules are produced?
a. $180.00
b. $533.33
c. $700.00
d. $713.33
ANS: B
DIF:
LOC: Costs of production
MSC: Applicative
75.
$1,350
$1,900
$2,500
Average
Variable
Cost
Refer to Table 13-9. What is the marginal cost of creating the tenth instructional module in a given month?
a. $900
b. $1,250
c. $2,500
d. $3,060
ANS: C
DIF:
LOC: Costs of production
MSC: Applicative
74.
Average
Fixed
Cost
Fixed
Costs
REF:
TOP:
13-3
NAT: Analytic
Average fixed cost
Refer to Table 13-9. How many instructional modules are produced when marginal cost is $1,300?
a. 4
b. 5
c. 7
d. 8
ANS: D
DIF:
LOC: Costs of production
MSC: Applicative
REF:
TOP:
13-3
Marginal cost
NAT: Analytic
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or distributed without the prior consent of the publisher.
Refer to Table 13-9. One month, Teacher's Helper produced 18 instructional modules. What was the average
fixed cost for that month?
a. $60
b. $108
c. $811
d. It can't be determined from the information given.
ANS: A
DIF:
LOC: Costs of production
MSC: Applicative
REF:
TOP:
13-3
NAT: Analytic
Average fixed cost
REF:
TOP:
13-3
NAT: Analytic
Cost curves | Marginal cost
This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. This may not be resold, copied,
or distributed without the prior consent of the publisher.