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 a. inputs and quantity of output. b. inputs and revenue. c. inputs and costs. d. inputs and profit. 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 a. $5.00 b. $5.42 c. $6.21 d. $6.43 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 a. $1.00. b. $3.50. c. $5.00. d. $6.00. ____ 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? a. $64 b. $85 c. $90 d. $100 ____ 7. Refer to Table 13-8. What is the average total cost of producing 2 gigaplots at Jimmy's Gigaplot factory? a. $14.00 b. $18.50 c. $22.50 d. $26.50 ____ 8. The minimum points of the average variable cost and average total cost curves occur where a. the marginal cost curve lies below the average variable cost and average total cost curves. b. the marginal cost curve intersects those curves. c. the average variable cost and average total cost curves intersect. d. the slope of total cost is the smallest. Figure 13-8 The figure below depicts average total cost functions for a firm that produces automobiles.
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____ 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 ____ 10. Refer to Figure 13-8 . This firm experiences diseconomies of scale at what output levels? a.
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This note was uploaded on 05/01/2011 for the course ECON 2100 taught by Professor Darrinv.gulla during the Summer '08 term at Morehouse.

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

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