Question 1

Describe how an accounting firm could experience economies of scale.

Accepted Answer

Specialization of labor can produce econ...

Question 2

In the long run, when marginal cost is above average total cost, the average total cost curve exhibits

Accepted Answer

A)   economies of scale.
B)   diseconomies of scale.
C)   constant returns to scale.
D)   efficient scale.E) All of the above
F) B) and C)

Question 3

Economic profit

Accepted Answer

A)   will never exceed accounting profit.
B)   is most often equal to accounting profit.
C)   is always at least as large as accounting profit.
D)   is a less complete measure of profitability than accounting profit.E) None of the above
F) B) and C)

Question 4

Explicit costs

Accepted Answer

A)   do not require an outlay of money by the firm.
B)   enter into the accountant's measurement of a firm's profit.
C)   enter into the economist's measurement of a firm's profit.
D)   Both b and c are correct.E) A) and B)
F) A) and C)

Question 5

The field of industrial organization addresses how the number of firms affects prices in a market and the efficiency of the market outcome.

Accepted Answer

A) True 
 B)False

Question 6

Scenario 13-8
Wanda owns a lemonade stand. She produces lemonade using five inputs: water, sugar, lemons, paper cups, and labor. Her costs per glass are as follows: $0.01 for water, $0.02 for sugar, $0.03 for lemons, $0.02 for cups, and $0.10 for the opportunity cost of her labor. She can sell 300 glasses for $0.50 each.
-Refer to Scenario 13-8. What are Wanda's total economic profits?

Accepted Answer

A)   $150
B)   $126
C)   $96
D)   $54E) A) and D)
F) C) and D)

Question 7

The Three Amigo's company produced and sold 500 dog beds. The average cost of production per dog bed was $50. Each dog be sold for a price of $65. The Three Amigo's total costs are

Accepted Answer

A)   $7,500.
B)   $25,000.
C)   $32,500.
D)   $67,500.E) A) and D)
F) B) and C)

Question 8

Scenario 13-4
Suppose that Abdul opens a coffee shop. He receives a loan from a bank for $100,000. He withdraws $50,000 from his personal savings account. The interest rate on the loan is 8%, and the interest rate on his savings account is 2%.
-Refer to Scenario 13-4. Abdul's explicit cost of capital is

Accepted Answer

A)   $8,000.
B)   $4,000.
C)   $2,000.
D)   $1,000.E) All of the above
F) C) and D)

Question 9

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

Accepted Answer

A)   assigning limited tasks to its employees, so they can master those tasks.
B)   employing a smaller number of workers.
C)   producing a smaller quantity of output.
D)   producing an output level higher than the efficient scale.E) All of the above
F) C) and D)

Question 10

When a firm experiences economies of scale, long-run average total cost falls as the quantity of output increases.

Accepted Answer

A) True 
 B)False

Question 11

Table 13-19
 
-Refer to Table 13-19. What is the shape of the average-variable-cost curve?

Accepted Answer

AVC = VC/Q, where VC is graphed on the v...

Question 12

Economists and accountants usually disagree on the inclusion of implicit costs into the cost analysis of a firm.

Accepted Answer

A) True 
 B)False

Question 13

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?

Accepted Answer

A)   2 houses
B)   3 houses
C)   5 houses
D)   8 housesE) A) and C)
F) B) and C)

Question 14

Can economic profit ever exceed accounting profit?

Accepted Answer

No. Economic profit = Accounting profit ...

Question 15

Figure 13-9
The figure below depicts average total cost functions for a firm that produces automobiles. 
-Refer to Figure 13-9. At levels of output between M and N, the firm experiences

Accepted Answer

A)   economies of scale.
B)   diseconomies of scale.
C)   constant returns to scale.
D)   both the benefits of specialization and diminishing marginal productivity.E) None of the above
F) All of the above

Question 16

Figure 13-9
The figure below depicts average total cost functions for a firm that produces automobiles. 
-Refer to Figure 13-9. At output levels greater than N, the firm experiences

Accepted Answer

A)   economies of scale.
B)   constant returns to scale.
C)   diseconomies of scale.
D)   minimum efficient scale.E) A) and D)
F) B) and C)

Question 17

Scenario 13-7
Julia prepares tax returns and does bookkeeping. Last year her revenues from the tax and bookkeeping business were $150,000, and her expenses for the business were $15,000. When she started her tax and bookkeeping business, Julia gave up her supplemental job doing in-home pet sitting. She used to earn $10,000 per year from pet sitting. Assume that she incurred no costs for her pet sitting business.
-Refer to Scenario 13-7. Julia's accounting profits are

Accepted Answer

A)   $160,000.
B)   $150,000.
C)   $135,000.
D)   $125,000.E) B) and C)
F) A) and B)

Question 18

Table 13-1
 
-Refer to Table 13-1. What is total output when 5 workers are hired?

Accepted Answer

A)   -10
B)   90
C)   185
D)   225E) B) and C)
F) B) and D)

Question 19

Total revenue minus only explicit costs is called

Accepted Answer

A)   accounting profit.
B)   economic profit.
C)   average total cost.
D)   implicit profit.E) All of the above
F) A) and D)

Question 20

Katya owns a math-tutoring business. Her accountant most likely includes which of the following costs on her financial statements? i)  workbooks containing practice problems
Ii)  rent for the storefront
Iii)  wages Katya could earn as a bookkeeper
Iv)  interest that Katya's money was earning before she spent her savings to set up the
Tutoring business

Accepted Answer

A)   i)  only
B)   i)  and ii)  only
C)   iii)  and iv)  only
D)   i) , ii) , iii) , and iv) E) A) and D)
F) B) and D)

Exam 12: The Costs of Production

Table 13-19 -Refer to Table 13-19. What is the shape of the average-variable-cost curve?

Correct Answer
verified
AVC = VC/Q, where VC is graphed on the v...
View Answer

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?

Correct Answer
verified

Correct Answer
verified

The field of industrial organization addresses how the number of firms affects prices in a market and the efficiency of the market outcome.

Correct Answer
verified

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. At output levels greater than N, the firm experiences

Correct Answer
verified

In the long run, when marginal cost is above average total cost, the average total cost curve exhibits

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Economists and accountants usually disagree on the inclusion of implicit costs into the cost analysis of a firm.

Correct Answer
verified

Correct Answer
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Can economic profit ever exceed accounting profit?

Correct Answer
verified
No. Economic profit = Accounting profit ...
View Answer

Total revenue minus only explicit costs is called

Correct Answer
verified

Economic profit

Correct Answer
verified

Table 13-1 -Refer to Table 13-1. What is total output when 5 workers are hired?

Correct Answer
verified

Describe how an accounting firm could experience economies of scale.

Correct Answer
verified
Specialization of labor can produce econ...
View Answer

Correct Answer
verified

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. At levels of output between M and N, the firm experiences

Correct Answer
verified

The Three Amigo's company produced and sold 500 dog beds. The average cost of production per dog bed was $50. Each dog be sold for a price of $65. The Three Amigo's total costs are

Correct Answer
verified

When a firm experiences economies of scale, long-run average total cost falls as the quantity of output increases.

Correct Answer
verified

Explicit costs

Correct Answer
verified

Exam 12: The Costs of Production

Table 13-19 -Refer to Table 13-19. What is the shape of the average-variable-cost curve?

Correct AnswerverifiedAVC = VC/Q, where VC is graphed on the v...View AnswerShow Answer

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?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The field of industrial organization addresses how the number of firms affects prices in a market and the efficiency of the market outcome.

Correct AnswerverifiedShow Answer

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. At output levels greater than N, the firm experiences

Correct AnswerverifiedShow Answer

In the long run, when marginal cost is above average total cost, the average total cost curve exhibits

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Economists and accountants usually disagree on the inclusion of implicit costs into the cost analysis of a firm.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Can economic profit ever exceed accounting profit?

Correct AnswerverifiedNo. Economic profit = Accounting profit ...View AnswerShow Answer

Total revenue minus only explicit costs is called

Correct AnswerverifiedShow Answer

Economic profit

Correct AnswerverifiedShow Answer

Table 13-1 -Refer to Table 13-1. What is total output when 5 workers are hired?

Correct AnswerverifiedShow Answer

Describe how an accounting firm could experience economies of scale.

Correct AnswerverifiedSpecialization of labor can produce econ...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. At levels of output between M and N, the firm experiences

Correct AnswerverifiedShow Answer

The Three Amigo's company produced and sold 500 dog beds. The average cost of production per dog bed was $50. Each dog be sold for a price of $65. The Three Amigo's total costs are

Correct AnswerverifiedShow Answer

When a firm experiences economies of scale, long-run average total cost falls as the quantity of output increases.

Correct AnswerverifiedShow Answer

Explicit costs

Correct AnswerverifiedShow Answer

Correct Answer
verified
AVC = VC/Q, where VC is graphed on the v...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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No. Economic profit = Accounting profit ...
View Answer

Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
verified
Specialization of labor can produce econ...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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