880 ? Chapter 13/The Costs of Production
Table 13-3 Number of Workers 0 1 2 3 4 5 Total Output 0 Marginal Product -- 30 40 50 40 30 40. Refer to Table 13-3. What is total output when 1 worker is hired?
a. 30 b. 40 c. 120 d. 160
ANS: A DIF: LOC: Costs of production MSC: Analytical
2 REF: 13-2 NAT: Analytic TOP: Marginal product
41. Refer to Table 13-3. What is total output when 2 workers are hired?
a. 30 b. 40 c. 70 d. 120
ANS: C DIF: LOC: Costs of production MSC: Analytical
2 REF: 13-2 NAT: Analytic TOP: Marginal product
42. Refer to Table 13-3. What is total output when 3 workers are hired?
a. 30 b. 40 c. 70 d. 120
ANS: D DIF: LOC: Costs of production MSC: Analytical
2 REF: 13-2 NAT: Analytic TOP: Marginal product
43. Refer to Table 13-3. What is total output when 4 workers are hired?
a. 40 b. 70 c. 120 d. 160
ANS: D DIF: LOC: Costs of production MSC: Analytical
2 REF: 13-2 NAT: Analytic TOP: Marginal product
44. Refer to Table 13-3. What is total output when 5 workers are hired?
a. 70 b. 120 c. 160 d. 190
ANS: D DIF: LOC: Costs of production MSC: Analytical
2 REF: 13-2 NAT: Analytic TOP: Marginal product
Chapter 13/The Costs of Production ? 881
Table 13-4
Gallo Cork Factory Number Number of of Workers Machines 1 2 2 2 3 2 4 2 5 2 6 2 7 2 Output (corks produced per hour) 5 10 20 35 55 70 80 Marginal Product of Labor Cost of Workers Cost of Machines Total Cost 45. Refer to Table 13-4. Each worker at Gallo's cork factory costs $12 per hour. The cost of each machine is $20
per day regardless of the number of corks produced. If Gallo's produces at a rate of 70 corks per hour and operates 8 hours per day, what is Gallo’s total labor cost per day? a. $72 b. $112 c. $576 d. $616
ANS: C DIF: LOC: Costs of production MSC: Applicative
2 REF: 13-2 NAT: Analytic TOP: Variable costs
46. Refer to Table 13-4. Each worker at Gallo's cork factory costs $12 per hour. The cost of each machine is $20
per day regardless of the number of corks produced. What is the total daily cost of producing at a rate of 55 units per hour if Gallo’s operates 8 hours per day? a. $480 b. $576 c. $520 d. $616
ANS: C DIF: LOC: Costs of production 2 REF: 13-2
TOP: Total cost NAT: Analytic MSC: Applicative
47. Refer to Table 13-4. Each worker at Gallo's cork factory costs $12 per hour. The cost of each machine is $20
per day regardless of the number of corks produced. Assume the number of machines does not change. If Gallo's produces at a rate of 78 corks per hour, what is the total machine cost per day? a. $20 b. $40 c. $240
d. We are unable to determine total machine costs from the information given.
ANS: B DIF: LOC: Costs of production 2 REF: 13-2
TOP: Fixed costs NAT: Analytic MSC: Applicative
48. Refer to Table 13-4. Each worker at Gallo's cork factory costs $12 per hour. The cost of each machine is $20
per day regardless of the number of corks produced. If Gallo's produces at a rate of 35 corks per hour, what is the total labor cost per hour? a. $40 b. $48 c. $384 d. $424
ANS: B DIF: LOC: Costs of production MSC: Applicative
2 REF: 13-2 NAT: Analytic TOP: Variable costs
882 ? Chapter 13/The Costs of Production
49. Refer to Table 13-4. Assume Gallo's currently employs 5 workers. What is the marginal product of labor
when Gallo's adds a 6th worker? a. 5 corks per hour b. 15 corks per hour c. 25 corks per hour d. 70 corks per hour
ANS: B DIF: LOC: Costs of production MSC: Applicative
2 REF: 13-2 NAT: Analytic TOP: Marginal product
50. Refer to Table 13-4. Assume Gallo's currently employs 2 workers. What is the marginal product of labor
when Gallo's adds a 3rd worker? a. 5 corks per hour b. 10 corks per hour c. 20 corks per hour d. 25 corks per hour
ANS: B DIF: LOC: Costs of production MSC: Applicative
2 REF: 13-2 NAT: Analytic TOP: Marginal product
51. Refer to Table 13-4. Gallo's cork factory experiences diminishing marginal product of labor with the addition
of which worker? a. the third worker b. the fourth worker c. the fifth worker d. the sixth worker
ANS: D DIF: LOC: Costs of production MSC: Applicative
2 REF: 13-2 NAT: Analytic TOP: Marginal product
Figure 13-3
100908070605040302010246810121416QuantityCost52. Refer to Figure 13-3. The graph illustrates a typical
a. total-cost curve. b. production function.
c. production possibilities frontier. d. fixed-cost curve.
ANS: A DIF: LOC: Costs of production MSC: Interpretive
2 REF: 13-2 NAT: Analytic TOP: Total-cost curve
Chapter 13/The Costs of Production ? 883
53. Refer to Figure 13-3. The graph illustrates a typical total cost curve. Based on its shape, what does the
corresponding production function look like?
a. an upward-sloping curve that increases at an increasing rate b. an upward-sloping curve that increases at a decreasing rate c. a downward-sloping curve d. a horizontal straight line
ANS: B DIF: LOC: Costs of production MSC: Interpretive
2 REF: 13-2 NAT: Analytic TOP: Total-cost curve | Production function
54. Refer to Figure 13-3. Which of the following is true of the production function (not pictured) that underlies
this total cost function? (i) Total output increases as the quantity of inputs increases but at a decreasing rate. (ii) Marginal product is diminishing for all levels of input usage. (iii) The slope of the production function decreases as the quantity of inputs increases.
a.
b. c. d. (i) only
(ii) and (iii) only (i) and (iii) only (i), (ii), and (iii)
3
REF: 13-2 NAT: Analytic TOP: Production function
ANS: D DIF:
LOC: Costs of production MSC: Interpretive
55. Refer to Figure 13-3. The changing slope of the total cost curve reflects
a. decreasing average variable cost. b. decreasing average total cost. c. decreasing marginal product. d. increasing fixed cost.
ANS: C DIF: LOC: Costs of production MSC: Interpretive
2 REF: 13-2 NAT: Analytic TOP: Marginal product
56. Refer to Figure 13-3. Which of the following statements best captures the nature of the underlying production
function?
a. Output increases at a decreasing rate with additional units of input. b. Output increases at an increasing rate with additional units of input. c. Output decreases at a decreasing rate with additional units of input. d. Output decreases at an increasing rate with additional units of input.
ANS: A DIF: LOC: Costs of production MSC: Interpretive
2 REF: 13-2 NAT: Analytic TOP: Production function
57. Refer to Figure 13-3. Assuming that the firm depicted produces cookies, which of the statements below is
most consistent with the shape of the total cost curve?
a. Producing an additional cookie is always more costly than producing the previous cookie. b. Total production of cookies decreases with additional units of input.
c. Producing additional cookies is equally costly, regardless of how many cookies are already being
produced.
d. Producing additional cookies becomes increasingly costly only when the number of cookies already
being produced is large.
ANS: A DIF: LOC: Costs of production MSC: Interpretive
2 REF: 13-2 NAT: Analytic TOP: Production function
884 ? Chapter 13/The Costs of Production
58. A total-cost curve shows the relationship between the
a. quantity of an input used and the total cost of production. b. quantity of output produced and the total cost of production. c. total cost of production and profit.
d. total cost of production and total revenue.
ANS: B DIF: LOC: Costs of production MSC: Definitional
1 REF: 13-2 NAT: Analytic TOP: Total-cost curve
59. If the total cost curve gets steeper as output increases, the firm is experiencing
a. diseconomies of scale. b. economies of scale.
c. diminishing marginal product. d. increasing marginal product.
ANS: C DIF: LOC: Costs of production MSC: Interpretive
2 REF: 13-2 NAT: Analytic TOP: Total-cost curve
60. David’s firm experiences diminishing marginal product for all ranges of inputs. The total cost curve
associated with David’s firm a. gets flatter as output increases. b. gets steeper as output increases. c. is constant for all ranges of output. d. is unrelated to the production function.
ANS: B DIF: LOC: Costs of production MSC: Interpretive
2 REF: 13-2 NAT: Analytic TOP: Total-cost curve
61. Which of the following statements about a production function is correct for a firm that uses labor to produce
output?
a. The production function depicts the relationship between the quantity of labor and the quantity of
output.
b. The slope of the production function measures marginal product.
c. The slopes of the production function and the total cost curve are inversely related; if one is
increasing, the other is decreasing. d. All of the above are correct.
ANS: D DIF: LOC: Costs of production MSC: Interpretive
3 REF: 13-2 NAT: Analytic
TOP: Production function | Total-cost curve
Sec03 - The Costs of Production - The Various Measures of Cost
MULTIPLE CHOICE1.
Total cost can be divided into two types of costs: a. fixed costs and variable costs. b. fixed costs and marginal costs. c. variable costs and marginal costs. d. average costs and marginal costs.
1
REF: 13-3 NAT: Analytic TOP: Fixed costs | Variable costs
ANS: A DIF: LOC: Costs of production MSC: Definitional