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- 1. Multiple Choice
Economists assume that the typical person who starts her own business does so with the intention of
donating the profits from her business to charity.
capturing the highest number of sales in her industry.
maximizing profits.
minimizing costs.
- 2. Multiple Choice
Economists assume that the goal of the firm is to maximize total
revenue.
profits.
costs.
satisfaction.
- 3. Multiple Choice
If Danielle sells 300 wrist bands for $0.50 each, her total revenues are
$150.
$299.50.
$300.
$600.
- 4. Multiple Choice
The Wax Works sells 400 candles at a price of $10 per candle. The Wax Works' total costs for producing 400 candles are $500. The Wax Works' economic profit is
-$100.
$3,500.
$4,500.
indeterminate from this information.
- 5. Multiple Choice
Scenario 8.1: You are the owner and only employee of a company that writes computer software that is used by gamblers to collect sports data. Last year you earned a total revenue of $90,000. Your costs for equipment, rent, and supplies were $60,000. To start this business you invested an amount of your own capital that could pay you a return of $40,000 a year.
Refer to Scenario 8.1. During the year your economic costs were
$40,000.
$60,000.
$100,000.
$130,000.
- 6. Multiple Choice
Scenario 8.1: You are the owner and only employee of a company that writes computer software that is used by gamblers to collect sports data. Last year you earned a total revenue of $90,000. Your costs for equipment, rent, and supplies were $60,000. To start this business you invested an amount of your own capital that could pay you a return of $40,000 a year.
Refer to Scenario 8.1. A yearly normal return for your computer software firm would be
$20,000.
$40,000.
$60,000.
$100,000.
- 7. Multiple Choice
Scenario 8.1: You are the owner and only employee of a company that writes computer software that is used by gamblers to collect sports data. Last year you earned a total revenue of $90,000. Your costs for equipment, rent, and supplies were $60,000. To start this business you invested an amount of your own capital that could pay you a return of $40,000 a year.
Refer to Scenario 8.1. Your accounting profit last year was
$10,000.
$30,000.
$50,000.
$60,000.
- 8. Multiple Choice
Scenario 8.1: You are the owner and only employee of a company that writes computer software that is used by gamblers to collect sports data. Last year you earned a total revenue of $90,000. Your costs for equipment, rent, and supplies were $60,000. To start this business you invested an amount of your own capital that could pay you a return of $40,000 a year.
Refer to Scenario 8.1. Your economic profit last year was
-$40,000.
-$10,000.
$10,000.
$30,000.
- 9. Multiple Choice
When adding another unit of labor leads to an increase in output that is smaller than the increases in output that resulted from adding previous units of labor, the firm is experiencing
diminishing labor.
diminishing output.
diminishing marginal product.
negative marginal product.
- 10. Multiple Choice
Refer Figure 8.1. The marginal product of the second worker is ________ lawns mowed.
3
5
8
11
- 11. Multiple Choice
Refer to Figure 8.1. The average product with two workers is ________ lawns mowed.
4
5
5.5
11
- 12. Multiple Choice
Refer to Figure 8.1. The marginal product of the first worker is ________ lawns moved.
3
4
5
11
- 13. Multiple Choice
Refer to Figure 8.1. The average product of the first worker is ________ lawns moved.
a. 3
b. 4
c. 5
d. 11
3
4
5
11
- 14. Multiple Choice
Refer to Table 8.1. Each worker at the Wooden Chair Factory costs $12 per hour. The cost of each machine is $20 per day regardless of the number of chairs produced. If the factory produces at a rate of 70 chairs per hour and operates 8 hours per day, what is the factory’s total labor cost per day?
$72
$112
$576
$616
- 15. Multiple Choice
Refer to Table 8.1. Each worker at the Wooden Chair Factory costs $12 per hour. The cost of each machine is$20 per day regardless of the number of chairs produced. What is the total daily cost of producing at a rate of 55 chairs per hour if the factory operates 8 hours per day?
$480
$576
$520
$616
- 16. Multiple Choice
Refer to Table 8.1. Each worker at the Wooden Chair Factory costs $12 per hour. The cost of each machine is $20 per day regardless of the number of chairs produced. If the factory produces at a rate of 35 chairs per hour, what is the total labor cost per hour?
$40
$48
$384
$424
- 17. Multiple Choice
Refer to Table 8.1. Assume the Wooden Chair Factory currently employs 5 workers. What is the marginal product of labor when the factory adds a 6th worker?
5 chairs per hour
15 chairs per hour
25 chairs per hour
70 chairs per hour
- 18. Multiple Choice
Suppose a certain firm is able to produce 165 units of output per day when 15 workers are hired. The firm is able to produce 181 units of output per day when 16 workers are hired, holding other inputs fixed. The marginal product of the 16th worker is
10 units of output.
11 units of output.
16 units of output.
181 units of output.
- 19. Multiple Choice
Diseconomies of scale occur when
average fixed costs are falling.
average fixed costs are constant.
long-run average total costs rise as output increases.
long-run average total costs fall as output increases.
- 20. Multiple Choice
Firms may experience diseconomies of scale when
they are too small to take advantage of specialization.
large management structures are bureaucratic and inefficient.
there are too few employees, and managers do not have enough to do.
average fixed costs begin to rise again.
- 21. Multiple Choice
Refer to Figure 8.2. The three average total cost curves on the diagram labeled ATC1, ATC2, and ATC3 most likely correspond to three different
time horizons.
products.
firms.
factory sizes.
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