ECO 365T Wk 5 – Apply Summative Assessment Quiz (2021 New)

Answer the question on the basis of the following information.

Number of Workers Total 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 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

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 Total Product

0 0

1 10

2 22

3 36

4 48

5 58

6 66

7 63

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 Workers Units 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 ATC

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

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 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 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 Workers Units of Output

0 0

1 30

2 70

3 122

4 165

5 190

6 210

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 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 = $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 Workers Units 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 Total Cost

0 $ 24

1 33

2 41

3 48

4 54

5 61

6 69

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 Total Cost

0 $ 24

1 33

2 41

3 48

4 54

5 61

6 69

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 $ 24

1 33

2 41

3 48

4 54

5 61

6 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

3 122

4 165

5 190

6 210

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