管理经济学第七版英文教辅chapter_6.pdf

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1、1 Managerial Economics,7e(Keat)Chapter 7 The Theory and Estimation of Cost(Appendices 7A,7B,and 7C)Multiple-Choice Questions 1)To an economist,total costs include A)explicit,but not implicit costs.B)implicit,but not explicit costs.C)explicit and implicit costs.D)neither explicit nor implicit costs.A

2、nswer:C Diff:1 2)Economists consider which of the following costs to be irrelevant to a short-run business decision?A)opportunity cost B)out-of-pocket cost C)historical cost D)replacement cost Answer:C Diff:1 3)Which of the following is a relevant cost?A)replacement cost B)sunk cost C)historical cos

3、t D)fixed cost E)All of the above are relevant.Answer:A Diff:1 4)Which of the following distinctions helps to explain the difference between relevant and irrelevant cost?A)accounting cost vs.direct cost B)historical cost vs.replacement cost C)sunk cost vs.fixed cost D)variable cost vs.incremental co

4、st Answer:B Diff:1 2 5)Which of the following distinctions does not help to explain the difference between relevant and irrelevant cost?A)historical vs.replacement cost B)sunk vs.incremental cost C)variable vs.fixed cost D)out-of-pocket vs.opportunity cost E)All help to explain the difference.Answer

5、:D Diff:2 6)Costs of production that change with the rate of output are A)sunk costs.B)opportunity costs.C)fixed costs.D)variable costs.Answer:D Diff:1 7)Changes in the short-run total costs result from changes in only A)variable costs.B)fixed costs.C)zero.D)total fixed costs.Answer:A Diff:1 8)Econo

6、mic profit equals accounting profit minus A)explicit costs.B)implicit costs.C)fixed costs.D)variable costs.Answer:B Diff:1 9)Which of the following is most likely a fixed cost?A)expenditures for raw materials B)wages for unskilled labor C)fuel cost D)property taxes Answer:D Diff:1 3 10)Average fixed

7、 cost A)does not change as total output increases or decreases.B)varies directly with total output.C)falls continuously as total output expands.D)rises as the output is expanded.Answer:C Diff:1 11)Average fixed cost is A)AC minus AVC.B)TC divided by Q.C)AVC minus MC.D)TC minus TVC.Answer:A Diff:1 12

8、)Which of the following cost relationships is not true?A)AFC=AC-MC B)TVC=TC-TFC C)The change in TVC/the change in Q=MC D)The change in TC/the change in Q=MC Answer:A Diff:2 13)When a firm increased its output by one unit,its AFC decreased.This is an indication that A)the law of diminishing returns h

9、as taken effect.B)MC AFC.C)AVC AFC.D)the firm is spreading out its total fixed cost.Answer:D Diff:3 14)The distinction between sunk and incremental costs is most helpful in answering which question?A)How many more people should be added to the production process?B)What is the correct price to charge

10、?C)Should we begin to build a new factory?D)Should we continue developing a new software application that we began last year?Answer:D Diff:2 4 15)Which of the following relationships is correct?A)When marginal product starts to decrease,marginal cost starts to decrease.B)When marginal cost starts to

11、 increase,average cost starts to increase.C)When marginal cost starts to increase,average variable cost starts to increase.D)When marginal product starts to decrease,marginal cost starts to increase.Answer:D Diff:2 16)The relationship between MC and AC can best be described as A)when AC increases,MC

12、 starts to increase.B)when MC increases,AC starts to increase.C)when MC decreases,AC decreases.D)when MC exceeds AC,AC increases.Answer:D Diff:2 17)The law of diminishing returns begins first to affect a firms short-run cost structure when A)average variable cost begins to increase.B)marginal cost b

13、egins to increase.C)average cost begins to increase.D)average fixed cost begins to decrease.Answer:B Diff:2 18)When a firm increased its output by one unit,its AC rose from$45 to$50.This implies that its MC is A)$5.B)between$45 and$50.C)greater than$50.D)Cannot be determined from the above informati

14、on Answer:C Diff:3 19)When a firms MC curve shifts to the right,it implies that A)new firms are entering the market.B)labor productivity is decreasing.C)labor productivity is increasing.D)the firms overhead costs are decreasing.Answer:C Diff:3 5 20)MC increases because A)MC naturally increases as th

15、e firm nears capacity.B)labor is paid overtime wages when volume increases.C)in the short run,MC always increases.D)the law of diminishing returns takes effect.Answer:D Diff:3 21)The marginal cost will intersect the average variable cost curve A)when the average variable cost curve is rising.B)where

16、 average variable cost curve equals price.C)at the minimum point of the average variable cost curve.D)The two will never intersect.Answer:C Diff:2 22)Which of the following cost functions will exhibit both decreasing and increasing marginal costs?A)a cubic cost function B)a quadratic cost function C

17、)a linear cost function D)All of the above Answer:A Diff:2 23)Which of the following statements best represents a difference between short-run and long-run cost?A)Less than one year is considered the short run;more than one year the long run.B)There are no fixed costs in the long run.C)In the short-

18、run labor must always be considered the variable input and capital the fixed input.D)All of the above are true.Answer:B Diff:1 24)When a firm increased its output by one unit,its AC decreased.This implies that A)MC AC.B)MC=AC.C)MC AC Answer:B Diff:3 29)The learning curve A)is really no different fro

19、m a marginal cost curve.B)calculates average cost at a particular point in time.C)shows the decrease in unit cost as more of the same product is produced over time.D)None of the above Answer:C Diff:1 30)The learning curve indicates that A)economies of scale are taking effect.B)repetition of various

20、production tasks cause unit costs to decrease.C)workers must learn new skills in order to improve.D)it takes time to learn a new skill.Answer:B Diff:1 7 31)Which level indicates the point of maximum economic efficiency?A)lowest point on AC curve B)lowest point on AVC curve C)lowest point on MC curve

21、 D)None of the above Answer:A Diff:2 32)Which of the following actions has the best potential for experiencing economies of scope?A)producing a product that has appeal to a wider segment of the market B)producing computers and software C)producing spaghetti and soft drinks D)producing cars and truck

22、s Answer:D Diff:2 33)If total cost equals$2,000 and quantity produced is 100 units,then A)fixed cost is$200 and average variable cost is$18.B)fixed cost is$600 and average variable cost is$14.C)fixed cost is$500 and marginal cost is$15.D)Either A or B can be correct.Answer:D Diff:3 34)A short-run to

23、tal cost function,TC=100+32Q-4Q2+0.4Q3,indicates the existence of A)a linear total cost curve.B)a constant average variable cost curve.C)a U-shaped average variable cost curve.D)a constant marginal cost curve.Answer:C Diff:3 35)The results of many empirical studies of short-run cost functions have s

24、hown that total costs conform to A)a quadratic total cost function.B)a power cost function.C)a linear cost function.D)a cubic cost function.Answer:C Diff:1 8 36)Among the problems encountered when time series analysis is used to estimate cost functions is A)that technological changes may have occurr

25、ed.B)that accounting changes may have occurred during the period analyzed.C)that some costs are recorded on the books of account at a time other than when they are incurred.D)All of the above Answer:D Diff:2 37)The method of estimating long-run costs in which knowledgeable professionals familiar wit

26、h production facilities and processes calculate optimal combination of inputs to produce given quantities and then estimate costs is known as A)engineering cost estimating.B)the survivorship method.C)regression analysis.D)None of the above Answer:A Diff:2 38)When the survivorship method of cost esti

27、mating is used,an increase,over time,in the proportion of industry product produced by medium size firms indicates the existence of A)continuing economies of scale.B)continuing diseconomies of scale.C)a U-shaped long-run average cost curve.D)large technological changes.Answer:C Diff:2 39)The major a

28、dvantage of using cross-sectional analysis for long-run costs studies includes A)the inclusion in the sample of different plants of different sizes.B)the avoidance of having to adjust for inflationary trends.C)the avoidance of having to account for interregional cost differences.D)All of the above E

29、)A and B above Answer:E Diff:2 40)In the long run A)fixed costs tend to be greater than variable costs.B)variable costs tend to be greater than fixed costs.C)all costs are fixed costs.D)all costs are variable costs.Answer:D Diff:1 9 41)Assuming the existence of economies of scale,if a firm finds tha

30、t it can reduce its unit cost by decreasing its scale of production,it means that A)it has too much production capacity relative to its demand.B)it should try to produce less.C)the law of diminishing returns has not taken effect.D)it has too much fixed overhead relative to its variable cost.Answer:A

31、 Diff:2 42)As a firm attempts to increase its production,its long-run average costs eventually rise because of A)the law of diminishing returns.B)diseconomies of scale.C)fixed capital.D)insufficient demand.Answer:B Diff:1 43)Economies of scale are created by greater efficiency of capital and by A)lo

32、nger chains of command in management.B)better wages for labor.C)smaller plant sizes.D)increased specialization of labor.Answer:D Diff:2 44)Economies of scale are indicated by A)declining long-run AVC.B)declining long-run AFC.C)declining long-run AC.D)declining long-run TC.Answer:C Diff:1 45)Which of

33、 the following is a reason for economies of scale?A)Fixed costs are spread out as volume increases.B)The law of diminishing returns does not take effect.C)Input productivity increases as a result of greater specialization.D)There is greater savings in transportation costs.Answer:C Diff:2 10 46)Disec

34、onomies of scale can be caused by A)the law of diminishing returns.B)bureaucratic inefficiencies.C)increasing advertising and promotional costs.D)All of the above Answer:B Diff:1 47)Which of the following is the best example of economies of scope?A)Coca-Cola expands its global operations to sub-Saha

35、ra Africa.B)Alcohol for car fuel is produced from corn.C)A decides to rent out its Web site to independent e-commerce companies.D)A company reduces its cost by getting bigger discounts for bulk purchases.Answer:C Diff:2 48)Short-run cost functions are estimated using A)time-series regression analysi

36、s.B)cross-sectional regression analysis.C)nominal cost data.D)present value cost data.Answer:A Diff:1 49)In estimating short-run cost functions,one must adjust for A)price level changes.B)accounting procedure changes.C)product heterogeneity.D)All of the above Answer:D Diff:1 50)Long-run cost functio

37、ns are estimated using A)time-series regression analysis.B)cross-sectional regression analysis.C)cost accounting data.D)None of the above Answer:B Diff:1 11 Analytical Questions 1)You have opened your own word-processing service.You bought a personal computer,and paid$5,000 for it.However,due to the

38、 cost changes in the computer industry,the current price of an equivalent machine is$2,500.You could sell any used machine for$1,000.If you were not word processing,you could earn$20,000 per year at an alternative job.Assume that the interest rate is 10%.You can also hire an assistant who can do eve

39、rything that you can do for$20,000 per year(you would still continue to do word processing).One person using one computer can produce 11,000 typed pages per year,and the price per page for your service is$2.You are considering three options:(1)expand your business by hiring an assistant;(2)leave you

40、r business the way it is;(3)shut down.Based on the costs and revenues above,which should you do?Explain and show any relevant calculations.Answer:Option 1:Revenue=$22,000 Opportunity cost of your time=20,000 Opportunity cost of interest on salvage value of existing computer=100 Economic profit=$1,90

41、0 Option 2:You still earn$1,900 as above.Revenue from additional worker=22,000 Wages=20,000 Opportunity cost of interest on purchase of new computer=250 Depreciation=1,500 Economic profit from additional worker=$250 Total economic profit=$2,150 Option 3:Revenue=0 No costs,since opportunity costs no

42、longer apply,and fixed costs are sunk.Economic profit=0(Could possibly view the$1,000 you get from selling the used computer as revenue,but makes no difference to final solution of problem.)Option 2,expand your business,is the best option.12 2)Freds Widget Company has purchased$500,000 in equipment,

43、which can be sold for a salvage value of$300,000 at any time.The best interest rate on alternative investments is 5%.What is the cost of using this machinery for one year?How would your answer be different if the machinery had not yet been purchased?Answer:Short-run cost=$15,000 Cost if the machiner

44、y was not purchased=$200,000+$25,000=$225,000 Explanation:The short-run cost is just the forgone interest.The short-run depreciation is sunk,and the salvage value doesnt change.The long-run cost(if the machine has not been purchased)is the depreciation cost plus the foregone interest on the whole$50

45、0,000.3)The following table shows the relationship between output and number of workers in the short run.If the wage is$50/day,find marginal cost of production.Number of Workers Output 0 0 1 50 2 110 3 300 4 450 5 590 6 665 7 700 8 725 9 740 10 735 Answer:Number of Workers Output MPL MC(=w/MPL)0 0-1

46、 50 50 1.00 2 110 60 0.91 3 300 190 0.26 4 450 150 0.33 5 590 140 0.36 6 665 75 0.67 7 700 35 1.43 8 725 25 2.00 9 740 15 3.33 10 735-5-13 4)Consider a firm that has just built a plant,which cost$1,000.Each worker costs$5.00 per hour.Based on this information,fill in the table below.Number of Worker

47、 Hours Output Marginal Product Fixed Cost Variable Cost Total Cost Marginal Cost Average Variable Cost Average Total Cost 0 0 -50 400 100 900 150 1300 200 1600 250 1800 300 1900 350 1950 Answer:Number of Worker Hours Output Marginal Product Fixed Cost Variable Cost Total Cost Marginal Cost Average V

48、ariable Cost Average Total Cost 0 0-1,000 0 1,000-50 200 4 1,000 250 1,250 1.25 1.25 6.25 100 700 10 1,000 500 1,500 0.50 0.7143 2.1429 150 1400 14 1,000 750 1,750 0.3571 0.5357 1.25 200 1650 5 1,000 1000 2,000 1 0.6061 1.2121 250 1800 3 1,000 1250 2,250 1.6667 0.6944 1.25 300 1900 2 1,000 1500 2,50

49、0 2.50 0.7895 1.3158 350 1975 1.5 1,000 1750 2,750 3.3333 0.8861 1.3924 5)How would each of the following affect the firms marginal,average,and average variable cost curves?a.An increase in wages b.A decrease in material costs c.The government imposes a fixed amount of tax.d.The rent that the firm p

50、ays on the building that it leases decreases.Answer:a.Wages are a variable cost,so MC,AVC,and ATC increase.b.Materials are a variable cost,so MC,AVC,and ATC decrease.c.A fixed or lump-sum tax increases ATC but not MC or AVC.d.Rent is generally viewed as a fixed cost,so ATC decreases,but MC and AVC a