Chapter 13/The Costs of Production ? 895
59. Refer to Table 13-6. What is the marginal cost of producing the fifth unit of output?
a. $4 b. $40 c. $50 d. $70
ANS: D DIF: LOC: Costs of production MSC: Analytical
2 REF: 13-3 NAT: Analytic TOP: Marginal cost
60. Refer to Table 13-6. What is the shape of the marginal cost curve for this firm?
a. constant
b. upward-sloping c. downward-sloping d. U-shaped
ANS: B DIF: LOC: Costs of production MSC: Analytical
3 REF: 13-3 NAT: Analytic TOP: Marginal cost
Table 13-7 Measures of Cost for ABC Inc. Widget Factory Quantity Variable Total of Widgets Costs Costs 0 1 $ 1 2 $ 3 $13 3 $ 6 $16 4 $10 5 $25 6 $21 Fixed Costs $10 $10 61. Refer to Table 13-7. The average fixed cost of producing five widgets is
a. $1.00. b. $2.00. c. $3.00. d. $5.00.
ANS: B DIF: LOC: Costs of production MSC: Applicative
2 REF: 13-3 NAT: Analytic TOP: Average fixed cost
62. Refer to Table 13-7. The average variable cost of producing four widgets is
a. $2.00. b. $2.50. c. $3.33. d. $5.00.
ANS: B DIF: LOC: Costs of production MSC: Applicative
2 REF: 13-3 NAT: Analytic TOP: Average variable cost
63. Refer to Table 13-7. The average total cost of producing one widget is
a. $1.00. b. $10.00. c. $11.00. d. $22.00.
ANS: C DIF: LOC: Costs of production MSC: Applicative
2 REF: 13-3 NAT: Analytic TOP: Average total cost
896 ? Chapter 13/The Costs of Production
64. Refer to Table 13-7. The marginal cost of producing the sixth widget is
a. $1.00. b. $3.50. c. $5.00. d. $6.00.
ANS: D DIF: LOC: Costs of production MSC: Applicative
2 REF: 13-3 NAT: Analytic TOP: Marginal cost
65. Refer to Table 13-7. What is the variable cost of producing zero widgets?
a. $0.00 b. $1.00 c. $10.00 d. $10.00
ANS: A DIF: LOC: Costs of production MSC: Applicative
2 REF: 13-3 NAT: Analytic TOP: Variable costs
66. Refer to Table 13-7. What is the marginal cost of producing the first widget?
a. $1.00 b. $10.00 c. $11.00
d. It can't be determined from the information given.
ANS: A DIF: LOC: Costs of production MSC: Applicative
2 REF: 13-3 NAT: Analytic TOP: Marginal cost
67. Refer to Table 13-7. What is the variable cost of producing five widgets?
a. $13.00 b. $14.00 c. $15.00
d. It can't be determined from the information given.
ANS: C DIF: LOC: Costs of production MSC: Applicative
2 REF: 13-3 NAT: Analytic TOP: Variable costs
Chapter 13/The Costs of Production ? 897
Table 13-8
Eileen’s Elegant Earrings produces pairs of earrings for its mail order catalogue business. Each pair is shipped in a separate box. She rents a small room for $150 a week in the downtown business district that serves as her factory. She can hire workers for $275 a week. There are no implicit costs.
Number of Workers 0 1 2 3 4 5 6 Boxes of Earrings Produced per Week 0 Marginal Product of Labor Cost of Factory Cost of Workers Total Cost of Inputs 330 $150 $275 $425 630 150 890 950 60 10 $825 $975 $1,375 $1,800 68. Refer to Table 13-8. What is the marginal product of the second worker?
a. 110 b. 200 c. 260 d. 300
ANS: D DIF: LOC: Costs of production MSC: Applicative
2 REF: 13-3 NAT: Analytic TOP: Marginal product
69. Refer to Table 13-8. What is the total cost associated with making 890 boxes of earrings per week?
a. $1,250 b. $1,325 c. $1,400 d. $1,575
ANS: A DIF: LOC: Costs of production 2 REF: 13-3
TOP: Total cost NAT: Analytic MSC: Applicative
70. Refer to Table 13-8. During the week of July 4th, Eileen doesn't produce any earrings. What are her costs
during the week? a. $0 b. $150 c. $275 d. $425
ANS: B DIF: LOC: Costs of production 2 REF: 13-3
TOP: Fixed costs NAT: Analytic MSC: Applicative
71. Refer to Table 13-8. One week, Eileen earns a profit of $125. If her revenue for the week is $1100, how many
boxes of earrings did she produce? a. 140 b. 330 c. 780 d. 950
ANS: C DIF: LOC: Costs of production MSC: Applicative
2 REF: 13-3 NAT: Analytic TOP: Accounting profit
898 ? Chapter 13/The Costs of Production
72. Refer to Table 13-8. Eileen has received an order for 3,000 boxes of earrings for next week. If she expects
that the trend in the marginal product of labor will continue in the same direction, it is most likely that her best decision will be to
a. not commit to meeting the order until she can move to a larger room and hire more workers to
produce the earrings.
b. close her business until she is able to hire more productive workers. c. hire about 12 new workers and hope she can satisfy the order.
d. commit to meeting the order and then take three weeks to complete the job.
ANS: A DIF: LOC: Costs of production MSC: Interpretive
2 REF: 13-3 NAT: Analytic TOP: Marginal product
Table 13-9
Teacher's Helper is a small company that has a subcontract to produce instructional materials for disabled children in public school districts. The owner rents several small rooms in an office building in the suburbs for $600 a month and has leased computer equipment that costs $480 a month.
Output (Instructional Modules per Month) Fixed Costs Variable Costs Total Cost Average Fixed Cost Average Variable Cost Average Total Cost Marginal Cost 0 1 2 3 4 5 6 7 8 9 10 $1,080 $1,080 $ 400 $1,480 $1,350 $1,900 $2,500 $2,430 $4,280 $216 $475 $965 $400 $450 $4,100 $5,400 $7,300 $10,880 $135 $980 $700 73. Refer to Table 13-9. What is the marginal cost of creating the tenth instructional module in a given month?
a. $900 b. $1,250 c. $2,500 d. $3,060
ANS: C DIF: LOC: Costs of production MSC: Applicative
2 REF: 13-3 NAT: Analytic TOP: Marginal cost
74. Refer to Table 13-9. What is the average variable cost for the month if 6 instructional modules are produced?
a. $180.00 b. $533.33 c. $700.00 d. $713.33
ANS: B DIF: LOC: Costs of production MSC: Applicative
2 REF: 13-3 NAT: Analytic TOP: Average variable cost
Chapter 13/The Costs of Production ? 899
75. Refer to Table 13-9. What is the average fixed cost for the month if 9 instructional modules are produced?
a. $108.00 b. $120.00 c. $150.00 d. $811.11
ANS: B DIF: LOC: Costs of production MSC: Applicative
2 REF: 13-3 NAT: Analytic TOP: Average fixed cost
76. Refer to Table 13-9. How many instructional modules are produced when marginal cost is $1,300?
a. 4 b. 5 c. 7 d. 8
ANS: D DIF: LOC: Costs of production MSC: Applicative
2 REF: 13-3 NAT: Analytic TOP: Marginal cost
77. Refer to Table 13-9. One month, Teacher's Helper produced 18 instructional modules. What was the average
fixed cost for that month? a. $60 b. $108 c. $811
d. It can't be determined from the information given.
ANS: A DIF: LOC: Costs of production MSC: Applicative
2 REF: 13-3 NAT: Analytic TOP: Average fixed cost
Table 13-10
Jimmy’s Gigaplots Factory Quantity of Fixed Variable gigaplots Cost Cost 1 $13 2 $28 3 4 $64 5 6 $108 7 $133 8 Total Cost $38 Average Fixed Cost Average Variable Cost Average Total Cost Marginal Cost $70 $110 $185 78. Refer to Table 13-10. What is the fixed cost of production at Jimmy's Gigaplot factory?
a. $12 b. $20 c. $25 d. $51
ANS: C DIF: LOC: Costs of production 2 REF: 13-3
TOP: Fixed costs NAT: Analytic MSC: Applicative
79. Refer to Table 13-10. What is the variable cost of producing 5 gigaplots at Jimmy's Gigaplot factory?
a. $64 b. $85 c. $90 d. $100
ANS: B DIF: LOC: Costs of production MSC: Applicative
2 REF: 13-3 NAT: Analytic TOP: Variable costs