Ch.22 Quiz

Instructions
Please read the questions carefully.

This assessment is worth 100 points.

  1. Entrepreneur's potential earnings as a salaried worker = $50,000
    Annual lease on building = $22,000
    Annual revenue from operations = $380,000
    Payments to workers = $120,000
    Utilities (electricity, water, disposal) costs = $8,000
    Entrepreneur's potential economic profit from the next best entrepreneurial activity = $80,000
    Entrepreneur's forgone interest on personal funds used to finance the business = $6,000

    Refer to the above data. Creamy Crisp's total revenues exceed its total costs, including a normal profit, by:   (4 points)

    a.  
    b.  
    c.  
    d.  

  2. Entrepreneur's potential earnings as a salaried worker = $50,000
    Annual lease on building = $22,000
    Annual revenue from operations = $380,000
    Payments to workers = $120,000
    Utilities (electricity, water, disposal) costs = $8,000
    Entrepreneur's potential economic profit from the next best entrepreneurial activity = $80,000
    Entrepreneur's forgone interest on personal funds used to finance the business = $6,000

    Refer to the above data. Creamy Crisp:   (4 points)

    a.  
    b.  
    c.  
    d.  

  3. Marginal product is:   (4 points)

    a.  
    b.  
    c.  
    d.  

  4. Marginal product:   (4 points)

    a.  
    b.  
    c.  
    d.  

  5. Which of the following is most likely to be a fixed cost?   (4 points)

    a.  
    b.  
    c.  
    d.  

  6. If you operated a small bakery, which of the following would be a variable cost in the short run?   (4 points)

    a.  
    b.  
    c.  
    d.  





  7. Refer to the above diagram. At output level Q total cost is:   (4 points)

    a.  
    b.  
    c.  
    d.  

  8. Assume that in the short run a firm is producing 100 units of output, has average total costs of $200, and average variable costs of $150. The firm's total fixed costs are:   (4 points)

    a.  
    b.  
    c.  
    d.  

  9. Answer the next question(s) on the basis of the following information:

    TFC = total fixed cost

    Q = quantity of output

    MC = marginal cost

    P = product price

    TVC = total variable cost




    Refer to the above information. Average total cost is:   (4 points)

    a.  
    b.  
    c.  
    d.  

  10. In the short run which of the following statements is correct?   (4 points)

    a.  
    b.  
    c.  
    d.  




  11. In the above diagram curves 1, 2, and 3 represent:   (4 points)

    a.  
    b.  
    c.  
    d.  

  12. The vertical distance between the total cost and the total variable cost curves differs by an amount which:   (4 points)

    a.  
    b.  
    c.  
    d.  

  13. Suppose that, when producing 10 units of output, a firm's AVC is $22, its AFC is $5, and its MC is $30. This:   (4 points)

    a.  
    b.  
    c.  
    d.  

  14. If a technological advance increases a firm's labor productivity, we would expect its:   (4 points)

    a.  
    b.  
    c.  
    d.  

  15. As a firm produces successive units of output in the short run we would expect:   (4 points)

    a.  
    b.  
    c.  
    d.  

  16. The Sunshine Corporation finds that its costs are $40 when it produces no output. Its total variable costs (TVC) change with output as shown in the accompanying table. Use this information to answer the following
    question(s).



    Refer to the above information. The marginal cost of the third unit of output is:   (4 points)

    a.  
    b.  
    c.  
    d.  




  17. The above diagram shows the short-run average total cost curves for five different plant sizes of a firm. In the long run the firm should produce output 0x with a plant of size:   (4 points)

    a.  
    b.  
    c.  
    d.  

  18. When diseconomies of scale occur:   (4 points)

    a.  
    b.  
    c.  
    d.  

  19. Which of the following is not a source of economies of scale?   (4 points)

    a.  
    b.  
    c.  
    d.  

  20. When a firm does more of something, it gets better at it. This learning-by-doing is:   (4 points)

    a.  
    b.  
    c.  
    d.  

  21. Use the following data to answer the next question(s). The letters A, B, and C designate three successively larger plant sizes.



    Refer to the above data. In the long run the firm should use plant size "A" for:   (4 points)

    a.  
    b.  
    c.  
    d.  



  22. Refer to the above diagram. Economies of scale:   (4 points)

    a.  
    b.  
    c.  
    d.  

  23. The long-run average total cost curve:   (4 points)

    a.  
    b.  
    c.  
    d.  

  24. The real opportunity cost of producing product X is the amounts of products Y, Z, and so forth, that might have been produced if resources had not been used to produce X.   (4 points)

    a.  
    b.  

  25. If the marginal-cost curve lies below the average-variable-cost curve, the average-variable-cost curve must be falling.   (4 points)

    a.  
    b.  



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