Chapter 13 The Costs of Production

Multiple Choice

1. Analyzing the behavior of the firm enhances our understanding of

a. what decisions lie behind the market supply curve.

b. how consumers allocate their income to purchase scarce resources.

c. how financial institutions set interest rates.

d. whether resources are allocated fairly.

ANS: A PTS: 1 DIF: 1 REF: 13-0

2. A student might describe information about the costs of production as

a. dry and technical.

b. boring.

c. crucial to understanding firms and market structures.

d. All of the above could be correct.

ANS: D PTS: 1 DIF: 1 REF: 13-0

3. A student might describe information about the costs of production as

a. exciting and fresh.

b. unimportant for understanding market structure.

c. dry and technical.

d. vibrant and enthralling.

ANS: C PTS: 1 DIF: 1 REF: 13-0

4. Which field of economics studies how the number of firms a ects the prices
in a market and the e iciency of market outcomes?

a. macroeconomics

b. industrial organization

c. labor economics

d. monetary economics
ANS: B PTS: 1 DIF: 1 REF: 13-0

Lĩnh vực kinh tế nào nghiên cứu số lượng doanh nghiệp ảnh hưởng như thế nào đến giá cả
trên thị trường và hiệu quả của kết quả thị trường?

Một.kinh tế vĩ mô

b.tổ chức công nghiệp

c.nhân lực kinh tế

d.kinh tế tiền tệ

5. Economists in the field of industrial organization study how

a. central banking policies a ect financial markets.

b. firms’ demand for labor and individuals’ supply of labor a ect resource markets.

c. firms’ decisions about prices and quantities depend on market conditions.

d. externalities and public goods a ect the environment.

ANS: C PTS: 1 DIF: 1 REF: 13-0

NAT: Analytic LOC: Costs of production TOP: Industrial organization

MSC: Definitional

6. Economists assume that the typical person who starts her own business
does so with the intention of

a. donating the profits from her business to charity.

b. capturing the highest number of sales in her industry.

c. maximizing profits.

d. minimizing costs.

ANS: C PTS: 1 DIF: 1 REF: 13-1

7. Economists normally assume that the goal of a firm is to

(i) sell as much of its product as possible.

(ii) set the price of the product as high as possible.

a. (i) and (ii) only

b. (ii) and (iii) only

c. (iii) only

d. (i), (ii), and (iii)

ANS: C PTS: 1 DIF: 2 REF: 13-1

NAT: Analytic LOC: Costs of production TOP: Profit maximization

MSC: Interpretive

8. Economists normally assume that the goal of a firm is to earn

(i) profits as large as possible, even if it means reducing output.

(ii) profits as large as possible, even if it means incurring a higher total cost.

(iii) revenues as large as possible, even if it reduces profits.

a. (i) and (ii) only

b. (i) and (iii) only

c. (ii) and (iii) only

d. (i), (ii), and (iii)

8. Các nhà kinh tế thường cho rằng mục tiêu của một công ty là kiếm được

lợi nhuận càng lớn càng tốt, ngay cả khi điều đó đồng nghĩa với việc giảm sản lượng.

(ii) lợi nhuận càng lớn càng tốt, ngay cả khi điều đó có nghĩa là phải chịu tổng chi phí
cao hơn.

(iii) doanh thu càng lớn càng tốt, ngay cả khi điều đó làm giảm lợi nhuận.

ANS: A PTS: 1 DIF: 2 REF: 13-1

NAT: Analytic LOC: Costs of production TOP: Profit maximization

MSC: Interpretive

9. An entrepreneur’s motivation to start a business arises from

Động lực khởi nghiệp của doanh nhân xuất phát từ

b. a desire to earn a profit.

c. an altruistic desire to provide the world with a good product.

d. All of the above could be correct.

ANS: D PTS: 1 DIF: 2 REF: 13-1

NAT: Analytic LOC: Costs of production TOP: Profit maximization

MSC: Interpretive

10. Economists normally assume that the goal of a firm is to

a. maximize its total revenue.

b. maximize its profit.

c. minimize its explicit costs.

d. minimize its total cost.

ANS: B PTS: 1 DIF: 1 REF: 13-1

NAT: Analytic LOC: Costs of production TOP: Profit maximization

MSC: Definitional

10. Which of the following can be added to profit to obtain total revenue?

Điều nào sau đây có thể được thêm vào lợi nhuận để có được tổng doanh thu?

Một.lợi nhuận ròng

b.lợi nhuận vốn

c.lợi nhuận hoạt động

d.Tổng chi phí

a. net profit
b. capital profit

c. operational profit

d. total cost

ANS: D PTS: 1 DIF: 2 REF: 13-1

NAT: Analytic LOC: Costs of production TOP: Total revenue

MSC: Analytical

11. If Darren sells 300 glasses of iced tea at $0.50 each, his total revenues are

a. $150.

b. $299.50.

c. $300.

d. $600.

ANS: A PTS: 1 DIF: 2 REF: 13-1

NAT: Analytic LOC: Costs of production TOP: Total revenue

MSC: Analytical

12. If Tanya sells 200 glasses of fruit punch at $0.50 each, her total revenues are

a. $100.

b. $199.50.

c. $200.

d. $400.

ANS: A PTS: 1 DIF: 2 REF: 13-1

NAT: Analytic LOC: Costs of production TOP: Total revenue

MSC: Analytical

13. Cody builds mailboxes. If he charges $20 for each mailbox, his total revenue
will be

a. $1,000 if he sells 100 mailboxes.

b. $500 if he sells 25 mailboxes.

d. $200 if he sells 5 mailboxes.

ANS: B PTS: 1 DIF: 1 REF: 13-1

14. The Big Box corporation produced and sold 500 units of output. The average
cost of production per unit was $50. Each unit sold for a price of $65. The Big Box
corporation’s total revenues are

a. $7,500.

b. $25,000.

c. $32,500.

d. $67,500.

ANS: C PTS: 1 DIF: 2 REF: 13-1

NAT: Analytic LOC: Costs of production TOP: Total revenue

MSC: Applicative

15. Trevor’s Tire Company produced and sold 500 tires. The average cost of
production per tire was $50. Each tire sold for a price of $65. Trevor’s Tire Company’s total
costs are

a. $7,500.

b. $25,000.

c. $32,500.

d. $67,500.

ANS: B PTS: 1 DIF: 2 REF: 13-1

16. John has decided to start his own lawn-mowing business. To purchase the
mowers and the trailer to transport the mowers, John withdrew $1,000 from his savings
account, which was earning 3% interest, and borrowed an additional $2,000 from the bank
at an interest rate of 7%. What is John's annual opportunity cost of the financial capital that
has been invested in the business?
John đã quyết định bắt đầu công việc kinh doanh cắt cỏ của riêng mình. Để mua máy cắt cỏ
và xe kéo để vận chuyển máy cắt cỏ, John đã rút 1.000 USD từ tài khoản tiết kiệm có lãi suất
3% và vay thêm 2.000 USD từ ngân hàng với lãi suất 7%. Chi phí cơ hội hàng năm của John
đối với vốn tài chính đã đầu tư vào doanh nghiệp là bao nhiêu?

a. $30

b. $140

c. $170

d. $300

ANS: C PTS: 1 DIF: 3 REF: 13-1

17. Gloria has decided to start her own snow removal business. To purchase the
necessary equipment, Gloria withdrew $2,000 from her savings account, which was
earning 3% interest, and borrowed an additional $4,000 from the bank at an interest rate of
7%. What is Gloria's annual opportunity cost of the financial capital that has been invested
in the business?

a. $60

b. $280

c. $340

d. $660

ANS: C PTS: 1 DIF: 2 REF: 13-1

18. Zach has decided to start his own photography studio. To purchase the
necessary equipment, Zach withdrew $10,000 from his savings account, which was
earning 3% interest, and borrowed an additional $5,000 from the bank at an interest rate of
8%. What is Zach's annual opportunity cost of the financial capital that has been invested
in the business?

a. $300

b. $400

c. $700

d. $1,650
ANS: C PTS: 1 DIF: 2 REF: 13-1

19. The value of a business owner's time is an example of

a. an opportunity cost.

b. a fixed cost.

c. an explicit cost.

d. total revenue.

ANS: A PTS: 1 DIF: 1 REF: 13-1

20. An example of an opportunity cost that is also an implicit cost is

a. a lease payment.

b. the cost of raw materials.

c. the value of the business owner’s time.

d. All of the above are correct.

ANS: C PTS: 1 DIF: 1 REF: 13-1