Practice Test III

# Practice Test III - Practice Test III Multiple Choice...

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Practice Test III Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____ 1. Susan used to work as a telemarketer, earning \$25,000 per year. She gave up that job to start a catering business. In calculating the economic profit of her catering business, the \$25,000 income that she gave up is counted as part of the catering firm's a. total revenue. b. opportunity costs. c. explicit costs. d. marginal costs. ____ 2. A production function is a relationship between Scenario 13-5 A certain firm produces and sells staplers. Last year, it produced 7,000 staplers and sold each stapler for \$6. In producing the 7,000 staplers, it incurred variable costs of \$28,000 and a total cost of \$45,000. ____ 3. Refer to Scenario 13-5 . In producing the 7,000 staplers, the firm's average total cost was Table 13-5 Measures of Cost for ABC Inc. Widget Factory Quantity of Widgets Variable Costs Total Costs Fixed Costs 0 \$10 1 \$ 1 2 \$ 3 \$13 3 \$ 6 \$16 4 \$10 5 \$25 6 \$21 \$10 ____ 4. Refer to Table 13-5 . The marginal cost of producing the sixth widget is ____ 5. Harry's Hotdogs is a small street vendor business owned by Harry Huggins. If Harry makes 15 hotdogs in his first hour of business and incurs a total cost of \$16.50, his average total cost per hotdog is

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a. \$1.10 b. \$6.50 c. \$15.00 d. \$16.50 Table 13-8 Quantity of gigaplots Fixed Cost Variable Cost Total Cost Average Fixed Cost Average Variable Cost Average Total Cost Marginal Cost 1 \$13 \$38 2 \$28 3 \$70 4 \$64 5 \$110 6 \$108 7 \$133 8 \$185 ____ 6. Refer to Table 13-8. What is the variable cost of producing 5 gigaplots at Jimmy's Gigaplot factory? ____ 7. Refer to Table 13-8. What is the average total cost of producing 2 gigaplots at Jimmy's Gigaplot factory? ____ 8. The minimum points of the average variable cost and average total cost curves occur where Figure 13-8 The figure below depicts average total cost functions for a firm that produces automobiles.
____ 9. Refer to Figure 13-8 . Which of the curves is most likely to characterize the short-run average total cost curve of the smallest factory? a. ATC A b. ATC B c. ATC C d. ATC D ____

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