ECO/365T PRINCIPLES OF MICROECONOMICS The Latest Version A+ Study Guide **********************************************
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ECO 365T Wk 5 Apply Summative Assessment Quiz (2021 New) Answer the question on the basis of the following information. Number of WorkersTotal Product Marginal Product 0 0 --1 8 8 2 10 3 25 4 30 5 3 6 34 The average product when there are two workers Multiple Choice • is 10. • is 9. • is 28. • cannot be determined from the information given. The following is cost information for the Creamy Crisp Donut Company. Entrepreneur's potential earnings as a salaried worker = $40,000 Annual lease on building = $25,000 Annual revenue from operations = $420,000 Payments to workers = $150,000
Utilities (electricity, water, disposal) costs = $8,000 Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000 Entrepreneur's forgone interest on personal funds used to finance the business = $6,000 Creamy Crisp's total revenues exceed its total costs, including a normal profit, by Multiple Choice • $309,000. • $183,000. • $237,000. • $111,000. Plant sizes get larger as you move from ATC-1 to ATC-4. Output 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 5,500 6,000
ATC-1 $ 10 15 8 12 9 10 12 8 15 6 18 10 20 12 24 15 29 19 35 25
ATC-2 ATC-3 $ 20 $ 30 17 25 15 20 13 18 11 16 9 14 7 12 11 10 13 8 15 9
ATC-4
In the long run, the firm should use plant size ATC-3 for what level of output? Multiple Choice • less than 3,000 • 3,000 to 3,500 • 4,000 to 4,500 • 5,000 to 5,500 Use the following data to answer the question. Inputs of Labor 0 0 1 10 2 22 3 36 4 48 5 58 6 66 7 63
Total Product
The average product (AP) when three units of labor are hired is Multiple Choice • 14 • 12. • 108. • 28. Answer the question on the basis of the following output data for a firm. Assume that the amounts of all nonlabor resources are fixed. Number of WorkersUnits of Output 0 0 1 50 2 90 3 125 4 150 5 170 6 165 The marginal product of the sixth worker is Multiple Choice • 165 units of output. • 20 units of output. • −5 units of output. • −15 units of output. Harvey quit his job at State University, where he earned $65,000 a year. He figures his entrepreneurial talent or forgone entrepreneurial income to be $5,000 a year. To start the business, he cashed in $70,000 in bonds that earned 10 percent interest annually to buy a software company, Extreme Gaming. In the first year, the firm sold 20,000 units of software at $50 for each unit. Of the $50 per unit, $45 goes for the costs of production, packaging, marketing, employee wages and benefits, and rent on a building. The total revenues of Harvey's firm in the first year were Multiple Choice • $100,000. • $23,000. • $900,000. • $1,000,000. Assume that in the short run a firm is producing 500 units of output, has average total costs of
$300, and has average variable costs of $220. The firm's total variable costs are. Multiple Choice • $110,000. • $150,000. • $80. • $40,000. The table shows three short-run cost schedules for three plants of different sizes that a firm might build in the long run. Plant 1 Plant 2 Plant 3 Output ATC Output ATC Output 10 $ 10 10 $ 15 10 $ 20 20 9 20 10 20 15 30 8 30 7 30 10 40 9 40 10 40 8 50 10 50 14 50 9
ATC
What is the long-run average cost of producing 20 units of output? Multiple Choice • $9 • $10 • $15 • $34 The following is cost information for the Creamy Crisp Donut Company. Entrepreneur's potential earnings as a salaried worker = $60,000 Annual lease on building = $30,000 Annual revenue from operations = $250,000 Payments to workers = $100,000 Utilities (electricity, water, disposal) costs = $8,000 Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000 Entrepreneur's forgone interest on personal funds used to finance the business = $6,000 Creamy Crisp's economic profit is Multiple Choice • $284,000. • $138,000. • $112,000. • −$34,000. Answer the question on the basis of the following cost data.
Output Total Cost 0 $ 24 1 33 2 41 3 48 4 54 5 61 6 69 The average variable cost of producing 6 units of output is Multiple Choice • $7.50. • $45. • $11.50. • $4.00. Answer the question on the basis of the following cost data. Output Average Fixed CostAverage Variable Cost 1 $ 50.00 $ 100.00 2 25.00 80.00 3 16.67 66.67 4 12.50 65.00 5 10.00 68.00 6 8.37 73.33 7 7.14 80.00 8 6.25 87.50 The marginal cost of the third unit of output is Multiple Choice • $16.67. • $200.00. • $40.00. • $250.00. Answer the question on the basis of the following output data for a firm. Assume that the amounts of all nonlabor resources are fixed. Number of WorkersUnits of Output 0 0
1 2 3 4 5 6
30 70 122 165 190 210
Diminishing marginal returns become evident with the addition of the Multiple Choice • first worker. • third worker. • fourth worker. • sixth worker. Harvey quit his job at State University, where he earned $65,000 a year. He figures his entrepreneurial talent or forgone entrepreneurial income to be $5,000 a year. To start the business, he cashed in $70,000 in bonds that earned 10 percent interest annually to buy a software company, Extreme Gaming. In the first year, the firm sold 20,000 units of software at $50 for each unit. Of the $50 per unit, $45 goes for the costs of production, packaging, marketing, employee wages and benefits, and rent on a building. The implicit costs of Harvey's firm in the first year were Multiple Choice • $100,000. • $77,000. • $23,000. • $1,000,000. Round Things, Inc.'s production process exhibits constant returns to scale. Currently their long-run average cost is $20/unit. If Round Things doubles its use of all inputs, its new long-run average total cost will be Multiple Choice • Less than $20/unit. • $20/unit. • greater than $40/unit. • greater than $20/unit but less than $40/unit. The following is cost information for the Creamy Crisp Donut Company. Entrepreneur's potential earnings as a salaried worker = $40,000 Annual lease on building = $25,000 Annual revenue from operations = $420,000 Payments to workers = $150,000 Utilities (electricity, water, disposal) costs = $8,000
Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000 Entrepreneur's forgone interest on personal funds used to finance the business = $6,000 If, other things equal, Creamy Crisp's revenue fell to $309,000, Multiple Choice • its implicit costs would exceed its economic costs. • it would earn a normal profit but not an economic profit. • it would suffer an economic loss. • its accounting profit would fall to $0. Answer the question on the basis of the following cost data. Output Average Fixed CostAverage Variable Cost 1 $ 50.00 $ 100.00 2 25.00 80.00 3 16.67 66.67 4 12.50 65.00 5 10.00 68.00 6 8.37 73.33 7 7.14 80.00 8 6.25 87.50 The total cost of six units of output is Multiple Choice • $440.00. • $81.70. • $490.00. • $100.00. The following is cost information for the Creamy Crisp Donut Company. Entrepreneur's potential earnings as a salaried worker = $55,000 Annual lease on building = $23,000 Annual revenue from operations = $320,000 Payments to workers = $130,000 Utilities (electricity, water, disposal) costs = $8,000 Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000 Entrepreneur's forgone interest on personal funds used to finance the business = $6,000 Creamy Crisp's total economic costs are
Multiple Choice • $302,000. • $161,000. • $18,000. • $167,000. The following is cost information for the Creamy Crisp Donut Company. 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 Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000 Entrepreneur's forgone interest on personal funds used to finance the business = $6,000 Creamy Crisp's explicit costs are Multiple Choice • $286,000. • $150,000. • $94,000. • $156,000. Assume that in the short run a firm is producing 1,000 units of output, has average total costs of $100, and has average variable costs of $75. The firm's total fixed costs are. Multiple Choice • $25,000. • $40. • $0.03. • $25. Answer the question on the basis of the following output data for a firm. Assume that the amounts of all nonlabor resources are fixed. Number of WorkersUnits of Output 0 0 1 45 2 100 3 160 4 230 5 320 6 400
Average product is at a maximum when Multiple Choice • two worker(s) is/are hired. • five worker(s) is/are hired. • six worker(s) is/are hired. • four worker(s) is/are hired.
Answer the question on the basis of the following cost data. Output 0 $ 24 1 33 2 41 3 48 4 54 5 61 6 69
Total Cost
The marginal cost of producing the sixth unit of output is Multiple Choice • $12.00. • $8. • $24.00. • $45. The following is cost information for the Creamy Crisp Donut Company. Entrepreneur's potential earnings as a salaried worker = $40,000 Annual lease on building = $25,000 Annual revenue from operations = $420,000 Payments to workers = $150,000 Utilities (electricity, water, disposal) costs = $8,000 Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000 Entrepreneur's forgone interest on personal funds used to finance the business = $6,000 Creamy Crisp's total economic costs are Multiple Choice • $309,000. • $183,000 • $111,000.
•
$189,000.
Answer the question on the basis of the following cost data. Output Average Fixed Cost Average Variable Cost 1 $ 50.00 $ 100.00 2 25.00 80.00 3 16.67 66.67 4 12.50 65.00 5 10.00 68.00 6 8.37 73.33 7 7.14 80.00 8 6.25 87.50 The total cost of six units of output is Multiple Choice • $440.00. • $81.70. • $490.00. • $100.00. The following is cost information for the Creamy Crisp Donut Company. Entrepreneur's potential earnings as a salaried worker = $40,000 Annual lease on building = $25,000 Annual revenue from operations = $420,000 Payments to workers = $150,000 Utilities (electricity, water, disposal) costs = $8,000 Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000 Entrepreneur's forgone interest on personal funds used to finance the business = $6,000 Creamy Crisp's implicit costs, including a normal profit, are Multiple Choice • $126,000. • $183,000.
• •
$111,000. $189,000.
Answer the question on the basis of the following cost data. Output 0 $ 24 1 33 2 41 3 48 4 54 5 61 6 69
Total Cost
The average total cost of producing 6 units of output is Multiple Choice • $7.5. • $4. • $8.In • $11.5. The ABC Corporation decreases all of its inputs by 25 percent and finds that its output falls by 21 percent. This means that initially it was producing Multiple Choice • in the range of diseconomies of scale. • in the range of economies of scale. • where AP is less than MP. • in the range of constant returns to scale. Assume that in the short run a firm is producing 200 units of output, has average total costs of $250, and has average variable costs of $150. The firm's total variable costs are. Multiple Choice • $30,000. • $50,000. • $100. • $20,000. Suppose that you could either prepare your own tax return in 8 hours or hire a tax specialist to prepare it for you in 2 hours. You value your time at $20.00 an hour; the tax specialist will charge you $45 an hour.
The opportunity cost of preparing your own tax return is Multiple Choice • $250. • $45. • $90. • $160. The following is cost information for the Creamy Crisp Donut Company. Entrepreneur's potential earnings as a salaried worker = $55,000 Annual lease on building = $23,000 Annual revenue from operations = $320,000 Payments to workers = $130,000 Utilities (electricity, water, disposal) costs = $8,000 Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000 Entrepreneur's forgone interest on personal funds used to finance the business = $6,000 Creamy Crisp's total revenues exceed its total costs, including a normal profit, by Multiple Choice • $302,000. • $161,000. • $159,000. • $18,000. Suppose that a firm produces 140,000 units a year and sells them all for $15 each. The explicit costs of production are $1,700,000 and the implicit costs of production are $275,000. The firm earns an accounting profit of Multiple Choice • $400,000 and an economic profit of $125,000. • $2,100,000 and an economic profit of $140,000. • $140,000 and an economic profit of $2,100,000. • $125,000 and an economic profit of $400,000. Answer the question on the basis of the following cost data. Output
Total Cost
0 1 2 3 4 5 6
$ 24 33 41 48 54 61 69
The total variable cost of producing 3 units of output is Multiple Choice • $8.00. • $24. • $16.00. • $12. The following is cost information for the Creamy Crisp Donut Company. Entrepreneur's potential earnings as a salaried worker = $38,000 Annual lease on building = $20,000 Annual revenue from operations = $280,000 Payments to workers = $118,000 Utilities (electricity, water, disposal) costs = $8,000 Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000 Entrepreneur's forgone interest on personal funds used to finance the business = $6,000 Creamy Crisp Donut Company Multiple Choice • has lower explicit costs, than implicit costs. • is earning a normal profit but not an economic profit. • is earning an economic profit. • is suffering an economic loss, when implicit costs are considered. Answer the question on the basis of the following output data for a firm. Assume that the amounts of all nonlabor resources are fixed. Number of Workers Units of Output 0 0 1 30 2 70
3 4 5 6
122 165 190 210
What is the firm’s average product when four workers are hired? Multiple Choice • 21.5 units of output. • 43 units of output. • 41.25 units of output. • 28.75 units of output. Answer the question on the basis of the following output data for a firm. Assume that the amounts of all nonlabor resources are fixed. Number of Workers Units of Output 0 0 1 50 2 90 3 125 4 150 5 170 6 165 The marginal product of the second worker is Multiple Choice • 41.7 units of output. • 50 units of output. • 40 units of output. • 35 units of output. If a firm increases all of its inputs by 12 percent and its output increases by 15 percent, then Multiple Choice • it is encountering diseconomies of scale. • it is encountering constant returns to scale. • it is encountering economies of scale. • the firm's long-run ATC curve will be rising. The following is cost information for the Creamy Crisp Donut Company. Entrepreneur's potential earnings as a salaried worker = $55,000
Annual lease on building = $23,000 Annual revenue from operations = $320,000 Payments to workers = $130,000 Utilities (electricity, water, disposal) costs = $8,000 Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000 Entrepreneur's forgone interest on personal funds used to finance the business = $6,000 If, other things equal, Creamy Crisp's revenue fell to $302,000, Multiple Choice • its implicit costs would exceed its economic costs. • it would earn a normal profit but not an economic profit. • it would suffer an economic loss. • its accounting profit would fall to $0. Output Average Fixed Cost Average Variable Cost 1 $ 50.00 $ 100.00 2 25.00 80.00 3 16.67 66.67 4 12.50 65.00 5 10.00 68.00 6 8.37 73.33 7 7.14 80.00 8 6.25 87.50 The average total cost of 8 units of output is Multiple Choice • $95.50. • $140.00. • $93.75. • $6.25. Harvey quit his job at State University, where he earned $45,000 a year. He figures his entrepreneurial talent or forgone entrepreneurial income to be $5,000 a year. To start the business, he cashed in $100,000 in bonds that earned 10 percent interest annually to buy a software company, Extreme Gaming. In the first year, the firm sold 11,000 units of software at $75 for each unit. Of the $75 per unit, $55 goes for the costs of production, packaging, marketing, employee
wages and benefits, and rent on a building. The economic profits of Harvey's firm in the first year were Multiple Choice • $220,000. • $60,000. • $160,000. • $825,000.
Answer the question on the basis of the following output data for a firm. Assume that the amounts of all nonlabor resources are fixed. Number of Workers Units of Output 0 0 1 50 2 90 3 125 4 150 5 170 6 165 Average product is at a maximum when Multiple Choice • two worker(s) is/are hired • five worker(s) is/are hired. • one worker(s) is/are hired. • four worker(s) is/are hired. Plant sizes get larger as you move from ATC-1 to ATC-4. Output ATC-1 ATC-2 ATC-3 ATC-4 1,500 $ 10 15 $ 20 $ 30 2,000 8 12 17 25 2,500 9 10 15 20 3,000 12 8 13 18 3,500 15 6 11 16 4,000 18 10 9 14 4,500 20 12 7 12 5,000 24 15 11 10 5,500 29 19 13 8 6,000 35 25 15 9 Which plant size would produce at the least cost for the 1,500-2,500
range of output? rev: 03_01_2021_QC_CS-255181 Multiple Choice • ATC-2 • ATC-1 • ATC-3 • ATC-4