Question 1

Figure 13-9
The figure below depicts average total cost functions for a firm that produces automobiles. 
-Refer to Figure 13-9. Which of the curves is most likely to characterize the short-run average total cost curve of the smallest factory?
A) ATCA
B) ATCB
C) ATCC
D) ATCD

Accepted Answer

The short-run average total cost curve of the smallest factory is typically the one with the highest costs at lower levels of output, which is usually the leftmost curve on a graph.

Question 2

Figure 13-10 
-Refer to Figure 13-10. The firm experiences economies of scale if it changes its level of output from
A) Q1 to Q2.
B) Q2 to Q3.
C) Q3 to Q4.
D) Q4 to Q5.

Accepted Answer

Economies of scale occur when the average total cost of production decreases as the quantity of output increases. In Figure 13-10, the average total cost curve is downward sloping between Q1 and Q2, indicating that the firm experiences economies of scale in this range of output.

Question 3

Figure 13-9
The figure below depicts average total cost functions for a firm that produces automobiles. 
-Refer to Figure 13-9. At levels of output less than M, the firm experiences
A) economies of scale.
B) diseconomies of scale.
C) constant returns to scale.
D) both diminishing marginal productivity and coordination problems.

Accepted Answer

The answer of Figure 13-9
The figure below depicts average total...

Question 4

Figure 13-9
The figure below depicts average total cost functions for a firm that produces automobiles. 
-Refer to Figure 13-9. The firm experiences constant returns to scale at which output levels?
A) output levels less than M
B) output levels between M and N
C) output levels greater than N
D) All of the above are correct as long as the firm is operating in the long run.

Accepted Answer

Constant returns to scale means that increasing all inputs by the same proportion will result in the same proportionate increase in output. In the figure, the slope of the ATC curve is constant between output levels M and N, indicating that increasing output in this range results in a proportional increase in costs, and thus constant returns to scale. Therefore, the correct answer is B, output levels between M and N.

Question 5

Figure 13-9
The figure below depicts average total cost functions for a firm that produces automobiles. 
-Refer to Figure 13-9. At output levels greater than N, the firm experiences
A) economies of scale.
B) constant returns to scale.
C) diseconomies of scale.
D) minimum efficient scale.

Accepted Answer

At output levels greater than N, the average total cost curve starts to rise, indicating that the firm is experiencing diseconomies of scale. This means that as the firm produces more, its costs per unit increase.

Question 6

Table 13-16
Listed in the table are the long-run total costs for three different firms.
 
-Refer to Table 13-16. Which firm is experiencing constant returns to scale?
A) Firm A only
B) Firm B only
C) Firm C only
D) Firm A and Firm B only

Accepted Answer

The answer of Table 13-16
Listed in the table are the...

Question 7

Table 13-16
Listed in the table are the long-run total costs for three different firms.
 
-Refer to Table 13-16. Which firm is experiencing diseconomies of scale?
A) Firm A only
B) Firm B only
C) Firm C only
D) Firm A and Firm B only

Accepted Answer

Firm C is experiencing diseconomies of scale because as output increases, long-run total costs increase at an increasing rate. Both Firm A and Firm B are experiencing economies of scale because as output increases, long-run total costs increase at a decreasing rate.

Question 8

Suppose that a firm's long­run average total costs of producing hand­crafted chairs is $300 when it produces 10,000 chairs and $325 when it produces 11,000 chairs. For this range of output, the firm is likely experiencing
A) economies of scale.
B) constant returns to scale.
C) specialization.
D) coordination problems.

Accepted Answer

The answer of Suppose that a firm's long­run average total...

Question 9

Table 13-17
Consider the following table of long-run total cost for four different firms:
 
-Refer to Table 13-17. Which firm has constant returns to scale over the entire range of output?
A) Firm 1
B) Firm 2
C) Firm 3
D) Firm 4

Accepted Answer

The answer of Table 13-17
Consider the following table of long-run...

Question 10

Figure 13-9
The figure below depicts average total cost functions for a firm that produces automobiles. 
-Refer to Figure 13-9. This firm experiences diseconomies of scale at what output levels?
A) output levels greater than N
B) output levels between M and N
C) output levels less than M
D) All of the above are correct as long as the firm is operating in the long run.

Accepted Answer

The answer of Figure 13-9
The figure below depicts average total...

Question 11

Figure 13-9
The figure below depicts average total cost functions for a firm that produces automobiles. 
-Refer to Figure 13-9. At levels of output between M and N, the firm experiences
A) economies of scale.
B) diseconomies of scale.
C) constant returns to scale.
D) both the benefits of specialization and diminishing marginal productivity.

Accepted Answer

At levels of output between M and N, the average total cost curve is relatively flat, indicating constant returns to scale. This means that as the firm increases its scale of production, there is no significant change in its average total cost.

Question 12

Suppose that a firm's long­run average total costs of producing small commuter jet airplanes increases as it produces between 2,000 and 4,000 airplanes. For this range of output, the firm is experiencing
A) economies of scale.
B) constant returns to scale.
C) diseconomies of scale.
D) specialization.

Accepted Answer

The firm is experiencing diseconomies of scale because its long-run average total costs are increasing as it produces between 2,000 and 4,000 airplanes, indicating that it is becoming less efficient as it grows in size.

Question 13

Figure 13-10 
-Refer to Figure 13-10. The three average total cost curves on the diagram labeled ATC1, ATC2, and ATC3 most likely correspond to three different
A) time horizons.
B) products.
C) firms.
D) factory sizes.

Accepted Answer

The different average total cost curves (ATC1, ATC2, ATC3) typically represent different factory sizes or scales of production, reflecting economies or diseconomies of scale.

Question 14

Figure 13-9
The figure below depicts average total cost functions for a firm that produces automobiles. 
-Refer to Figure 13-9. Which curve represents the long-run average total cost?
A) ATCA
B) ATCB
C) ATCC
D) ATCD

Accepted Answer

The long-run average total cost curve (ATCD) typically shows the lowest possible cost at which a firm can produce any given level of output when all inputs are variable, reflecting economies and diseconomies of scale.

Question 15

Figure 13-9
The figure below depicts average total cost functions for a firm that produces automobiles. 
-Refer to Figure 13-9. In the long run, the firm can operate on which of the following average total cost curves?
A) ATCA
B) ATCB
C) ATCC
D) All of the above are correct.

Accepted Answer

In the long run, firms can adjust all inputs and choose the scale of operation that minimizes costs, allowing them to operate on any of the average total cost curves depending on the level of output they choose.

Question 16

Figure 13-9
The figure below depicts average total cost functions for a firm that produces automobiles. 
-Refer to Figure 13-9. The firm experiences economies of scale at which output levels?
A) output levels less than M
B) output levels between M and N
C) output levels greater than N
D) All of the above are correct as long as the firm is operating in the long run.

Accepted Answer

The answer of Figure 13-9
The figure below depicts average total...

Question 17

In the long run a company that produces and sells organic tofu incurs total costs of $1,200 when output is 1,200 units and $1,650 when output is 1,400 units. The tofu company exhibits
A) diseconomies of scale because total cost is rising as output rises.
B) diseconomies of scale because average total cost is rising as output rises.
C) economies of scale because total cost is rising as output rises.
D) economies of scale because average total cost is falling as output rises.

Accepted Answer

The company is experiencing diseconomies of scale because as the output increases from 1,200 to 1,400, the total cost of production increases from $1,200 to $1,650, meaning that the cost per unit has increased. In other words, the average total cost is rising as output rises. This suggests that the company may be facing challenges with managing resources efficiently as it expands production.

Question 18

Suppose that a firm's long­run average total costs of producing custom wooden picnic tables is $300 when it produces 10,000 tables and $325 when it produces 11,000 tables. For this range of output, the firm is experiencing
A) economies of scale.
B) constant returns to scale.
C) diseconomies of scale.
D) specialization.

Accepted Answer

The increase in long-run average total cost with an increase in output indicates that the firm is experiencing diseconomies of scale. This means that as the firm expands its production beyond a certain point, the per-unit cost of production increases due to factors such as the need for additional resources or the complexity of managing larger operations.

Question 19

Figure 13-10 
-Refer to Figure 13-10. The firm experiences diseconomies of scale if it changes its level of output from
A) Q1 to Q2.
B) Q2 to Q3.
C) Q3 to Q4.
D) Q4 to Q5.

Accepted Answer

The answer of Figure 13-10 
-Refer to Figure 13-10. The...

Question 20

Figure 13-10 
-Refer to Figure 13-10. The firm experiences constant returns to scale if it changes its level of output from
A) Q1 to Q2.
B) Q2 to Q4.
C) Q1 to Q3.
D) Q4 to Q5.

Accepted Answer

Constant returns to scale occur when increasing the level of output results in a proportional increase in inputs, meaning the average cost remains constant. This typically happens over a range of output levels, such as from Q2 to Q4.

Quiz 13: The Costs of Production

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. Which of the curves is most likely to characterize the short-run average total cost curve of the smallest factory?

Figure 13-10 -Refer to Figure 13-10. The firm experiences economies of scale if it changes its level of output from

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. At levels of output less than M, the firm experiences

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. The firm experiences constant returns to scale at which output levels?

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. At output levels greater than N, the firm experiences

Table 13-16 Listed in the table are the long-run total costs for three different firms. -Refer to Table 13-16. Which firm is experiencing constant returns to scale?

Table 13-16 Listed in the table are the long-run total costs for three different firms. -Refer to Table 13-16. Which firm is experiencing diseconomies of scale?

Suppose that a firm's longrun average total costs of producing handcrafted chairs is $300 when it produces 10,000 chairs and $325 when it produces 11,000 chairs. For this range of output, the firm is likely experiencing

Table 13-17 Consider the following table of long-run total cost for four different firms: -Refer to Table 13-17. Which firm has constant returns to scale over the entire range of output?

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. This firm experiences diseconomies of scale at what output levels?

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. At levels of output between M and N, the firm experiences

Suppose that a firm's longrun average total costs of producing small commuter jet airplanes increases as it produces between 2,000 and 4,000 airplanes. For this range of output, the firm is experiencing

Figure 13-10 -Refer to Figure 13-10. The three average total cost curves on the diagram labeled ATC1, ATC2, and ATC3 most likely correspond to three different

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. Which curve represents the long-run average total cost?

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. In the long run, the firm can operate on which of the following average total cost curves?

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. The firm experiences economies of scale at which output levels?

In the long run a company that produces and sells organic tofu incurs total costs of $1,200 when output is 1,200 units and $1,650 when output is 1,400 units. The tofu company exhibits

Suppose that a firm's longrun average total costs of producing custom wooden picnic tables is $300 when it produces 10,000 tables and $325 when it produces 11,000 tables. For this range of output, the firm is experiencing

Figure 13-10 -Refer to Figure 13-10. The firm experiences diseconomies of scale if it changes its level of output from

Figure 13-10 -Refer to Figure 13-10. The firm experiences constant returns to scale if it changes its level of output from

Quiz 13: The Costs of Production

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. Which of the curves is most likely to characterize the short-run average total cost curve of the smallest factory?

Figure 13-10 -Refer to Figure 13-10. The firm experiences economies of scale if it changes its level of output from

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. At levels of output less than M, the firm experiences

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. The firm experiences constant returns to scale at which output levels?

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. At output levels greater than N, the firm experiences

Table 13-16 Listed in the table are the long-run total costs for three different firms. -Refer to Table 13-16. Which firm is experiencing constant returns to scale?

Table 13-16 Listed in the table are the long-run total costs for three different firms. -Refer to Table 13-16. Which firm is experiencing diseconomies of scale?

Suppose that a firm's long­run average total costs of producing hand­crafted chairs is $300 when it produces 10,000 chairs and $325 when it produces 11,000 chairs. For this range of output, the firm is likely experiencing

Table 13-17 Consider the following table of long-run total cost for four different firms: -Refer to Table 13-17. Which firm has constant returns to scale over the entire range of output?

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. This firm experiences diseconomies of scale at what output levels?

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. At levels of output between M and N, the firm experiences

Suppose that a firm's long­run average total costs of producing small commuter jet airplanes increases as it produces between 2,000 and 4,000 airplanes. For this range of output, the firm is experiencing

Figure 13-10 -Refer to Figure 13-10. The three average total cost curves on the diagram labeled ATC1, ATC2, and ATC3 most likely correspond to three different

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. Which curve represents the long-run average total cost?

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. In the long run, the firm can operate on which of the following average total cost curves?

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. The firm experiences economies of scale at which output levels?

In the long run a company that produces and sells organic tofu incurs total costs of $1,200 when output is 1,200 units and $1,650 when output is 1,400 units. The tofu company exhibits

Suppose that a firm's long­run average total costs of producing custom wooden picnic tables is $300 when it produces 10,000 tables and $325 when it produces 11,000 tables. For this range of output, the firm is experiencing

Figure 13-10 -Refer to Figure 13-10. The firm experiences diseconomies of scale if it changes its level of output from

Figure 13-10 -Refer to Figure 13-10. The firm experiences constant returns to scale if it changes its level of output from

Suppose that a firm's longrun average total costs of producing handcrafted chairs is $300 when it produces 10,000 chairs and $325 when it produces 11,000 chairs. For this range of output, the firm is likely experiencing

Suppose that a firm's longrun average total costs of producing small commuter jet airplanes increases as it produces between 2,000 and 4,000 airplanes. For this range of output, the firm is experiencing

Suppose that a firm's longrun average total costs of producing custom wooden picnic tables is $300 when it produces 10,000 tables and $325 when it produces 11,000 tables. For this range of output, the firm is experiencing