In the example presented by this graph

1. In the example presented by this graph, at what number of workers does the point of diminishing marginal product occur? See Figure.

	a.	2nd workers
	b.	3rd workers
	c.	4th workers
	d.	9th workers

Question 2

1. Billy Bob runs a seafood restaurant. Last year he earned $50,000 in revenue. He had explicit costs of $20,000. Billy Bob could have made $30,000 working for the county and could have received an additional $20,000 if he rented out his building and equipment. Calculate Billy Bob’s economic profit.

	a.	–$20,000
	b.	$20,000
	c.	$0
	d.	$30,000

Question 3

1. What is marginal product of the fourth worker? See Figure.

	a.	14
	b.	13
	c.	12
	d.	10

Question 4

1. Billy Bob runs a seafood restaurant. Last year he earned $50,000 in revenue. He had explicit costs of $20,000. Billy Bob could have made $30,000 working for the county and could have received an additional $20,000 if he rented out his building and equipment. Calculate Billy Bob’s implicit costs.

	a.	$20,000
	b.	$30,000
	c.	$50,000
	d.	$70,000

Question 5

1. Profits and losses are determined by

	a.	adding total cost to total revenue
	b.	subtracting explicit costs from total revenue
	c.	subtracting implicit costs from total revenue
	d.	subtracting total costs from total revenue

Question 6

1. In the example presented by this graph, what is total output when the fifth worker is added? See Figure.

	a.	50 meals served per hour
	b.	52 meals served per hour
	c.	54 meals served per hour
	d.	cannot be determined with the given information

Question 7

1. Which of the following types of cost always decreases with increasing output? Refer to the figure below.

	a.	Marginal Cost (MC)
	b.	Average Total Cost (ATC)
	c.	Average Fixed Cost (AFC)
	d.	Average Variable Cost (AVC)

Question 8

1. The table below lists costs for producing Big Macs, a product of McDonald’s. Based on the table, what are total fixed costs associated with Big Mac production? Use Figure.

	a.	$0
	b.	$100
	c.	$130
	d.	$150

Question 9

1. Billy Bob runs a seafood restaurant. Last year he earned $50,000 in revenue. He had explicit costs of $20,000. Billy Bob could have made $30,000 working for the county and could have received an additional $20,000 if he rented out his building and equipment. Calculate Billy Bob’s accounting profit.

	a.	$50,000
	b.	$20,000
	c.	$0
	d.	$30,000

Question 10

1. Diminishing marginal product refers to marginal product that initially _____ but eventually ______.

	a.	increases; further increases
	b.	decreases; further decreases
	c.	increases; decreases
	d.	decreases; increases

Question 11

1. Which of the following does not represent an implicit cost for a business owner?

	a.	the owner’s own time
	b.	a worker’s salary
	c.	the capital invested in the business
	d.	the owner’s resources used to conduct business

Question 12

1. Which of the following is NOT a factor of production?

	a.	output
	b.	land
	c.	labor
	d.	capital

Question 13

1. The cost of a firms inputs increased by 40%. As a result, output increased by 25%. This firm experienced

	a.	economies of scale
	b.	constant returns to scale
	c.	diseconomies of scale
	d.	None of these are true.

Question 14

1. In the long run, costs are

	a.	dependant on the firm
	b.	variable and fixed
	c.	fixed only
	d.	variable only

Question 15

1. Based on the table below, what is the average variable cost of producing 60 Big Macs? Use Figure.

	a.	$1.93
	b.	$1.74
	c.	$1.67
	d.	$1.71