Economics (McConnell) AP Edition, 19th Edition

Chapter 7: Businesses and the Costs of Production

Quiz

1
The WXY Corporation has fixed costs of $50. Its total variable costs (TVC) vary with output as shown in the following table.

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Refer to the table. The average total cost of 4 units of output is:
A)$27.50
B)$40.00
C)$52.50
D)$210.00
2
Use the following graph to answer the next question:

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The diagram shows the short-run average total cost curves for five different plant sizes for a firm. The firm experiences economies of scale over the range of plant sizes:
A)1 through 2 only
B)1 through 3 only
C)1 through 5
D)3 through 5 only
3
Explicit costs and implicit costs:
A)are alike in that both represent opportunity costs
B)are alike in that both reflect an outlay of cash
C)are alike in that both are deducted from revenue to find accounting profit
D)differ in that only explicit costs are deducted from revenue to find economic profit
4
Suppose that a business incurred implicit costs of $300,000 and explicit costs of $1,300,000 over the past year. If the firm earned $1,400,000 in revenue, its:
A)accounting profits were $400,000 and its economic profits were $100,000
B)accounting losses were $200,000 and its economic profits were $100,000
C)accounting profits were $100,000 and its economic profits were zero
D)accounting profits were $100,000 and its economic losses were $200,000
5
Which one of the following short-run cost curves would not be affected by an increase in the wage paid to a firm's labor?
A)Average variable cost
B)Average fixed cost
C)Average total cost
D)Marginal cost
6
If marginal product is positive but falling:
A)marginal cost must also be falling
B)average product must be falling
C)total product is increasing at a decreasing rate
D)total product is falling
7
The distinguishing feature of the short run is that:
A)at least one input is fixed
B)output is fixed
C)input prices are variable
D)technology is variable
8
The WXY Corporation has fixed costs of $30. Its total variable costs (TVC) vary with output as shown in the following table.

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Refer to the table. The marginal cost of the fourth unit of output is:
A)$30
B)$40
C)$50
D)$60
9
Use the following average total cost data to answer the next question. The letters A, B, and C designate three successively larger plant sizes.

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Refer to the data. In the long run, the firm should use plant size "A" for:
A)all possible levels of output
B)100 to 200 units of output
C)300 to 600 units of output
D)600 or more units of output
10
Suppose a particular firm exhibits constant returns to scale as it increases its output over any reasonable range. If it increases all its inputs by 10%, its:
A)total cost will increase by less than 10%
B)average total cost will increase by 10%
C)output will increase by 10%
D)long run average cost curve will shift to the right by 10%
McConnell Economics Nineteenth Edition Large Cover Image
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