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Chapter 7—Production Costs
MULTIPLE CHOICE
1. Which of the following is an explicit cost?

a. The opportunity cost of an owner/entrepreneur’s time invested in the firm.
b. The opportunity cost of the money the business owner/entrepreneur has invested in the
firm.
c. The wages paid to workers.
d. None of the above.
ANS: C PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
STA: DISC: Costs of production TOP: Costs and Profit
KEY: Bloom's: Comprehension
2. Explicit costs would include:

a. rent.
b. the interest loss of the business owner on money withdrawn from his/her saving account
and invested in the business.
c. the loss of rent on a building the business owner owns and uses in his/her business.
d. the opportunity costs of the business owner's time.
e. the use of tools owned by the business owner and dedicated to the business.
ANS: A PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
3. Unlike implicit costs, explicit costs:

a. reflect opportunity costs.
b. include the value of the owner's time.
c. are not included in the accounting statement of the firm.
d. are actual cash payments.
e. do not change with the output rate of the firm.
ANS: D PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
4. A young chef is considering opening his own sushi bar. To do so, he would have to quit his current
job, which pays $20,000 a year, and take over a store building that he owns and currently rents to his
brother for $6,000 a year. His expenses at the sushi bar would be $50,000 for food and $2,000 for gas
and electricity. What are his explicit costs?
a. $26,000.
b. $66,000.
c. $78,000.
d. $52,000.
e. $72,000.
ANS: D PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
5. Which of the following is not an explicit cost?

a. Salaries.
b. Sales taxes.
c. Utilities, such as gas and electricity.
d. Insurance.
e. The firm owner's time.
ANS: E PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
6. Cash payments to a steel mill for steel used in production would be an example of:
a. sunk costs.
b. fixed costs.
c. explicit costs.
d. implicit costs.
e. entrepreneurial costs.
7. Sam quits his job as an airline pilot and opens his own pilot training school. He was earning $40,000
as a pilot. He withdraws $10,000 from his savings where he was earning 6 percent interest and uses the
money in his new business. He uses a building he owns as a hanger and could rent it out for $5,000 per
year. He rents a computer for $1,200, buys office supplies for $500, rents an airplane for $6,000, pays
$1,300 for fuel and maintenance, and hires one worker for $30,000. Sam's total revenue from pilot
training classes this year equaled $90,400. Sam's explicit costs this year equals:
a. $84,400.
b. $39,000.
c. $55,000.
d. $45,600.
e. $40,000.
ANS: B PTS: 1 DIF: Challenging NAT: BUSPROG: Analytic
KEY: Bloom's: Application
8. Paul's Plumbing is a small business that employs 12 people. Which of the following is the best
example of an implicit cost incurred by this firm?
a. The tax payments on property owned by the firm.
b. The wages paid to the 12 employees.
c. The half of the payroll taxes on the wages of the 12 employees paid by the employers, but
not the half paid by the employees.
d. The accounting services provided free of charge to the firm by Paul's wife, who is an
accountant.
9. Which of the following would be considered an implicit cost?

a. Health insurance of employees paid for by the firm
b. The water bill of the firm
c. The salaries paid to the managers of the firm
d. Foregone rent on assets owned by the firm
10. The opportunity costs associated with the use of resources owned by a firm are:
a. externalities. c. explicit costs.
b. implicit costs. d. sunk costs.
ANS: B PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
11. Payments to nonowners of a firm are called:

a. implicit costs. c. explicit costs.
b. accounting costs. d. economic costs.
ANS: A PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
12. The amount of money that could have been made by renting a piece of land to be used for building an
office building instead of using the land for employee parking is a(n):
a. implicit cost. c. explicit cost.
b. accounting cost. d. pure economic cost.
13. Implicit costs are best thought of as:

a. variable costs.
b. marginal costs.
c. accounting costs.
d. opportunity costs.
e. sunk costs.
14. Which of the following is an implicit cost of going to college?

a. Tuition.
b. Books.
c. Lost income.
d. Future income.
e. Room and board.
15. Which of the following are implicit costs for a typical firm?
a. Insurance costs.
b. Electricity costs.
c. Opportunity costs of capital owned and used by the firm.
d. Cost of labor hired by the firm.
e. The cost of raw materials.
ANS: C PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
16. A firm's opportunity cost of using resources provided by the firm's owners is called:
a. sunk costs.
b. fixed costs.
c. explicit costs.
d. implicit costs.
e. entrepreneurial costs.
17. A young chef is considering opening his own sushi bar. To do so, he would have to quit his current
job, which pays $20,000 a year, and take over a store building that he owns and currently rents to his
brother for $6,000 a year. His expenses at the sushi bar would be $50,000, for food and $2,000 for gas
and electricity. What are his implicit costs?
a. $26,000.
b. $66,000.
c. $78,000.
d. $52,000.
e. $72,000.
18. Two friends, Diane and Sam, own and run a bar. Diane tends bar on Monday, Wednesday, and Friday
and receives a wage in addition to tips. Sam tends bar on Tuesday, Thursday, and Saturday and
receives only tips. Which of the following represents an implicit cost of operating the bar?
a. Diane's wage.
b. Sam's time.
c. Diane's tips.
d. Sam's tips.
e. Both Diane's and Sam's tips.
KEY: Bloom's: Analysis
19. Implicit costs are:

a. the opportunity costs of using resources owned by the entrepreneur in his/her own
business.
b. payments the business owner must make on borrowed funds.
c. costs which vary as the level of output varies.
d. those payments the business owner makes in cash.
e. the payments the business owner makes for public relations, such as donations to charity.
20. Sam quits his job as an airline pilot and opens his own pilot training school. He was earning $40,000
as a pilot. He withdraws $10,000 from his savings where he was earning 6 percent interest and uses the
money in his new business. He uses a building he owns as a hanger and could rent it out for $5,000 per
year. He rents a computer for $1,200, buys office supplies for $500, rents an airplane for $6,000, pays
$1,300 for fuel and maintenance, and hires one worker for $30,000. Sam's total revenue from pilot
training classes equaled $90,400. Sam's implicit costs for this year are equal to:
a. $84,400.
b. $39,000.
c. $55,000.
d. $45,600.
e. $40,000.
21. The sum of the explicit and implicit costs incurred in the production process is called:
a. fixed cost. c. marginal cost.
b. sunk cost. d. total cost.
22. Which of the following is most likely to be true of economic and accounting profits?
a. Economic profits are less than accounting profits.
b. Accounting profits are less than economic profits.
c. Economic profits plus accounting profits equal zero.
d. Accounting profits minus economic profits equal zero.
ANS: A PTS: 1 DIF: Challenging NAT: BUSPROG: Analytic
23. Economic profit is:

a. total revenues minus variable costs. c. total revenues minus explicit costs.
b. total revenues minus private costs. d. total revenues minus total costs.
24. Suppose that a small business takes in monthly revenue of $100,000. Labor, rental, energy, and other
purchased input costs are $70,000. The owner/entrepreneur could earn $5,000 per month in another
job, and the owner/entrepreneur could get a return of $5,000 each month if she sold her business and
invested the net proceeds in a financial asset, such as a treasury bond. Which of the following correctly
describes her monthly economic profit?
a. $100,000.
b. $90,000.
c. $70,000.
d. $30,000.
e. $20,000.
ANS: C PTS: 1 DIF: Challenging NAT: BUSPROG: Analytic
25. The difference between a firm's total revenues and total costs when all explicit and implicit costs are
included is the firm's:
a. economic profit. c. opportunity cost of capital.
b. accounting profit. d. long-run average total cost.
26. If a firm has total revenue of $200 million, explicit costs of $190 million, and implicit costs of $30
million, its economic profit is:
a. $200 million.
b. $70 million.
c. $10 million.
d. −$10 million.
e. −$20 million.
27. A firm has $200 million in total revenue and explicit costs of $190 million. Suppose its owners have
invested $100 million in the company at an opportunity cost of 10 percent interest rate per year. The
firm's economic profit is:
a. $400 million. c. $80 million.
b. $100 million. d. zero.
28. Economic profit is:

a. always less than zero.
b. never less than accounting profit.
c. less than accounting profit if implicit costs are zero.
d. less than accounting profit if implicit costs are greater than zero.
29. An economist left her $100,000-a-year teaching position to work full-time in her own consulting
business. In the first year, she had total revenue of $200,000 and business expenses of $100,000. She
made a(n):
a. economic profit.
b. economic loss.
c. implicit profit.
d. accounting loss but not an economic loss.
e. zero economic profit.
ANS: E PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
30. Economic profit equals accounting profit minus:

a. explicit costs. c. fixed costs.
b. implicit costs. d. variable costs.
ANS: B PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
31. An economist left his $100,000-a-year teaching position to work full-time in his own consulting
business. In the first year, he had total revenue of $200,000 and business expenses of $150,000. He
made a(n):
a. implicit profit.
b. economic loss.
c. economic profit.
d. accounting loss but not an economic loss.
e. zero economic profit.
32. A firm has $200 million in total revenue and explicit costs of $190 million. If its owners have invested
$100 million in the company at an opportunity cost of 10 percent interest per year, the firm's
accounting profit is:
a. $400 million.
b. $100 million.
c. $80 million.
d. $10 million.
e. zero.
33. Suppose a firm has total revenue of $200 million, explicit costs of $190 million, and implicit costs of
$20 million. This firm's accounting profit is:
a. $80 million. c. $10 million.
b. $70 million. d. −$10 million.
34. When total revenue minus total cost is equal to zero, the firm is:
a. earning above-average economic profit.
b. earning a normal profit.
c. losing too much money to stay in business.
d. earning abnormally low profits.
35. Normal profit is a term for:
a. explicit profit.
b. the minimum profit to keep a firm in operation.
c. the accounting profit forgone.
d. pure economic profit.
36. Normal profit is defined as a(n):

a. foregone percent rate of return.
b. opportunity profit.
c. implicit profit.
d. minimum necessary to keep a firm in operation.
37. Economists say that a firm has a normal profit when:

a. it earns a return of at least 10 percent. c. it can pay all its variable costs.
b. its accounting profit is positive. d. its economic profit is zero.
38. Which of the following is an example of a fixed input?

a. The acreage of a farmer's land. c. The size of a firm's plant.
b. Machinery. d. All of these.
STA: DISC: Costs of production TOP: Short-Run Production Costs
39. Variable inputs are defined as any resource that:

a. varies with the size of the firm's plant. c. can be changed as output changes.
b. cannot be changed as output changes. d. can be increased or decreased hourly.
STA: DISC: Costs of production | DISC: Productivity and growth
TOP: Short-Run Production Costs KEY: Bloom's: Knowledge
40. Which of the following represents the key difference between the short run and the long run?
a. In the long run, the firm makes commitments to a certain type of production technology
which are represented as fixed costs in the long run. For example, they have signed a lease
on a particular production facility. These fixed costs do not exist in the short run.
b. In the short run, the firm makes commitments to a certain type of production technology,
which are represented as fixed costs in the short run. For example, they have signed a lease
on a particular production facility. These fixed costs do not exist in the long run.
c. The short run refers to less than two years and the long run in over two years.
d. None of the above are correct.
41. During the short-run period of the production process, a firm will be:
a. unable to vary any of its factors of production.
b. able to vary some of its factors of production.
c. able to vary all of its factors of production.
d. able to vary the size of its plant.
42. The short run is a time period such that:

a. the existing firms in the market do not have sufficient time to change the amounts of any
of the inputs that they employ.
b. the existing firms in the market do not have sufficient time to either increase or decrease
their current rate of output.
c. the existing firms in the market do not have sufficient time to increase the size of their
existing plant or build a new factory.
d. new firms may build plants and enter the industry.
43. The short run is a period of time:

a. in which a firm uses at least one fixed input.
b. that is long enough to permit changes in the firm's plant size.
c. in which production occurs within one year.
d. in which production occurs within six months.
44. During the course of a week, McDonald's has enough time to hire or layoff workers, but it does not
have enough time to expand its kitchen or add an additional seating area. In this situation, McDonald's:
a. has no fixed costs. c. suffers an economic loss.
b. is in the short run. d. earns a large profit.
45. During the short run, a firm has enough time to adjust:
a. its technology.
b. its fixed inputs.
c. its variable inputs.
d. all of its inputs⎯both fixed and variable.
46. Which of the following factors of production is not variable in the long run?
a. the size of the firm's plant.
b. property taxes on the assets of the firm.
c. highly trained labor.
d. All factors of production are variable in the long run.
47. The long run is a period of:

a. at least one year.
b. sufficient length to allow a firm to expand output by hiring additional workers.
c. sufficient length to allow a firm to alter its plant size and capacity and all other factors of
production.
d. sufficient length to allow a firm to transform economic losses into economic profits by
hiring better workers.
48. The long run is a period of time:

a. that is too short to change the size of a firm's plant.
b. that is long enough to permit changes in all the firm's inputs, both fixed and variable.
c. in which production occurs beyond one year.
d. in which production occurs beyond five years.
49. The long run is a planning period:

a. during which the firm can vary all inputs including its plant size.
b. less than six months.
c. less than one year.
d. less than five years.
50. In the long run, total fixed cost:

a. falls. c. is constant.
b. rises. d. does not exist.
ANS: D PTS: 1 DIF: Challenging NAT: BUSPROG: Analytic
51. Which of the following statements is true?

a. Economic profit equals accounting profit minus implicit costs.
b. The short run is any period of time in which there is at least one fixed input.
c. A fixed input is any resource for which the quantity cannot change during the period under
consideration.
d. In the long run there are no fixed costs.
e. All of these.
52. The increase in total output that results from a unit increase in one unit of a variable input is equal to
the input's:
a. total product. c. average product.
b. marginal product. d. marginal cost.
53. Which of the following best describes a production function?

a. The relationship between consumer preferences and market demand.
b. The relationship between the quantity of labor employed and total cost.
c. The relationship between the maximum amounts of output a firm can produce and various
quantities of inputs.
d. The relationship between price and quantity supplied by sellers in a market.
54. If two workers can produce 22 units of output, and the addition of a third worker increases output to 30
units, the marginal product of the third worker is:
a. 8 units. c. 22 units.
b. 10 units. d. 30 units.
55. A firm can produce 450 gallons of milk per day with 4 workers and 500 gallons per day with 5
workers. The marginal product of the fifth worker expressed in gallons per worker per day, is:
a. 35. c. 70.
b. 50. d. 350.
56. A farm is able to produce 9,000 pints of strawberries per season on 10 acres. It adds one more acre and
is able to produce 12,000 pints per season. The marginal product of land for this farm is:
a. 900 pints per acre per year. c. 3,000 pints per acre per year.
b. 1,000 pints per acre per year. d. 12,000 pints per acre per year.
57. If the units of variable input in a production process are 1, 2, 3, 4, and 5, and the corresponding total
outputs are 30, 34, 37, 39, and 40, respectively. The marginal product of the fourth unit is:
a. 2. c. 37.
b. 1. d. 39.
58. A farm is able to produce 5,000 bushels of peaches per season on 100 acres. Assume it adds one more
acre and is able to produce 6,000 bushels per season. The marginal product of the additional acre of
land for this farm is:
a. 6,000 bushels per acre per year. c. 1,000 bushels per acre per year.
b. 5,000 bushels per acre per year. d. 11,000 bushels per acre per year.
59. A farm is able to produce 10,000 bushels of peanuts per season on 10 acres. Assume it adds one more
acre and is able to produce 12,000 bushels per season. The marginal product of the additional acre of
land for this farm is:
a. 10,000 bushels per acre per year. c. 2,000 bushels per acre per year.
b. 1,200 bushels per acre per year. d. 12,000 bushels per acre per year.
60. A farm can produce 10,000 bushels of wheat per year with 5 workers and 13,000 bushels with 6
workers. The marginal product of the sixth worker for this farm is:
a. 10,000 bushels. c. 500 bushels.
b. 3,000 bushels. d. 23,000 bushels.
61. Suppose when a car wash has 2 washing stations and 5 workers and is able to wash 100 cars per day.
When it adds a third station, but no more workers, it is able to wash 150 cars per day. The marginal
product of the third washing station is:
a. 100 cars per day. c. 5 cars per day.
b. 150 cars per day. d. 50 cars per day.
62. Marginal product measures the change in:

a. total cost brought about by changing production by one unit.
b. product price brought about by changing production by one unit.
c. a firm's revenue brought about by changing production by one unit.
d. the firm's output brought about by employing one additional unit of input.
e. the firm's profit brought about by employing one more input.
63. When a total output curve is falling, its corresponding marginal product curve is:
a. vertical. c. rising.
b. horizontal. d. falling.
Exhibit 7-1 Production of pizza data
Workers Pizzas
0 0
1 4
2 10
3 15
4 18
5 19
64. Exhibit 7-1 shows the change in the production of pizzas as more workers are hired. The marginal
product of the second employee equals:
a. 4.
b. 10.
c. 14.
d. 6.
e. 15.
product of the fifth employee equals:
a. 4.
b. 18.
c. 19.
d. 3.
e. 1.
66. Exhibit 7-1 shows the change in the production of pizzas as more workers are hired. The total output
of pizzas after hiring 4 workers is:
a. 4.
b. 15.
c. 18.
d. 3.
e. 1.
product of the labor input begins to fall with the employment of the ____ worker.
a. first
b. second
c. third
d. fourth
e. fifth
68. Exhibit 7-1 shows the change in the short run production of pizzas as more workers are hired. The
table shows marginal product increasing between the 0 to 2 hired workers. A possible reason for this
increased marginal product is:
a. increased wages.
b. increases in plant size.
c. decreases in fixed cost.
d. increased division of labor as additional workers are hired.
e. increased product price.
69. Exhibit 7-1 shows the change in the short-run production of pizzas as more workers are hired. The
table shows the marginal product of the labor input is decreasing with the hiring of the third worker. A
possible reason for this diminishing marginal product is:
a. decreased wages.
b. increases in plant size.
c. decreases in fixed cost.
d. increased division of labor as additional workers are hired.
e. decreases in labor productivity.
ANS: E PTS: 1 DIF: Challenging NAT: BUSPROG: Analytic
Exhibit 7-2 Cost schedule for pizza production
Labor Energy Materials

Pizzas Cost Cost Cost
0 $10 $ 0 $ 0
1 10 12 4
2 24 22 8
3 40 30 12
4 60 36 16
5 90 40 20
70. Exhibit 7-2 shows the labor, energy, and materials cost of making various quantities of pizzas. The
table shows that the labor cost of making pizzas will:
a. increase at a decreasing rate.
b. decrease at a decreasing rate.
c. decrease at an increasing rate.
d. increase at an increasing rate.
e. increase at a constant rate.
table shows that the energy cost of making pizzas will:
table shows that the materials cost of making pizzas will:
73. In the short run, a firm will eventually experience rising per-unit costs because of:
a. economies of scale. c. the law of supply.
b. diseconomies of scale. d. the law of diminishing returns.
74. Which of the following best describes the law of diminishing returns?
a. The principle that beyond some point the marginal product decreases as additional units of
a variable factor (ex: labor) are added to a fixed factor (ex: a restaurant kitchen).
b. The concept that as a person consumes more and more of a good, such as pizza slices, that
the marginal utility from each additional slice will decline.
c. The empirical fact that the profitability of firms declines in the long run due to increasing
competition.
d. None of the above.
75. Which of the following is an implication of the law of diminishing returns?

a. Total output will decline as more workers are hired.
b. In the long run, average total cost will eventually decline as output is expanded.
c. In the short run, expansion of output will eventually lead to increases in marginal cost and
average total cost.
d. A doubling of all inputs will lead to more than a doubling of output.
76. Bill lives in Montana and likes to grow zucchini. He applies fertilizer to his crops twice during the
growing season and notices that the second layer of fertilizer increases his crop, but not as much as the
first layer. What economic concept best explains this observation?
a. The law of diminishing marginal utility.
b. The law of diminishing returns.
c. Return equalization principle.
d. The principal-agent problem.
77. The law of diminishing marginal returns implies that, in the short run:
a. output must fall beyond a certain point.
b. price must fall beyond a certain point.
c. the marginal product of the variable input must eventually decrease.
d. wages of workers must eventually increase.
e. total cost must fall beyond a certain point.
78. In order for the law of diminishing returns to be present, we must have:
a. at least one factor of production to be fixed.
b. output decreasing as more laborers are hired.
c. the price of labor increasing as more workers are hired.
d. simultaneous changes in labor and capital.
e. double the output when labor input is doubled.
79. Applying a price of labor to the law of diminishing returns generates:

a. the law of increasing costs.
b. less output as more labor is hired.
c. differences in the quality of labor.
d. a negatively-sloped labor supply curve.
e. specialization and the division of labor.
80. As a fishing firm hires its first, second, and third workers, it could find that marginal product actually
rises. The reason for this is:
a. diminishing returns have set in.
b. the division of labor creates greater productivity.
c. the firm has hired another boat.
d. all tasks are shared by all workers.
e. less qualified workers are becoming available.
81. The law of diminishing returns applies to which of the following segments of the marginal product of
labor curve?
a. The entire curve. c. The upward sloping segment only.
b. The downward-sloping segment only. d. The point where labor input is zero.
82. The situation in which the marginal product of labor is greater than zero and declining as more labor is
hired is called the law of:
a. negative response. c. diminishing returns.
b. inverse return to labor. d. demand.
83. If a firm's use of labor obeys the law of diminishing returns, then:
a. it does not have enough time to hire or fire workers.
b. doubling the number of workers causes the firm's output to also double.
c. its marginal costs must be falling.
d. hiring additional workers adds less and less additional output.
84. The ____ is the situation in which the marginal product of labor is greater than zero and declining as
more labor is hired.
a. law of demand c. law of diminishing returns
b. law of diminishing supply d. law of returns to scale
Exhibit 7-3 A marginal product curve

85. As shown in Exhibit 7-3, the law of diminishing returns applies where there are:
a. more than 5 workers per day. c. more than 3 workers per day.
b. more than 4 workers per day. d. between 0 and 5 workers per day.
86. As shown in Exhibit 7-3, the marginal product of labor for the last worker hired when 2 workers are
employed per day is:
a. 50. c. 150.
b. 100. d. 175.
87. As shown in Exhibit 7-3, the marginal product of labor for the last worker hired when 5 workers are
employed per day is:
a. 50. c. 150.
b. 100. d. 175.
Exhibit 7-4 A marginal product curve

88. As shown in Exhibit 7-4, the law of diminishing returns applies in the range of:
a. over 10 workers per day. c. over 2 workers per day.
b. over 5 workers per day. d. between 0 and 5 workers per day.
89. As shown in Exhibit 7-4, which of the following conclusions can you draw about the firm's total
output curve?
a. It slopes downward throughout the range of 0−10 units of input.
b. It reaches a maximum at 5 units of output.
c. It has an inflection point at 5 units of input.
d. It has zero slope at 5 units of input.
Exhibit 7-5 Workers and output data
Total
Laborers Product
0 0
1 8
2 20
3 25
4 28
5 29
90. In Exhibit 7-5, diminishing returns set in when the ____ worker is hired.
a. first
b. second
c. third
d. fourth
e. fifth
91. In Exhibit 7-5, the marginal product of the second worker is:
a. 0.
b. 8.
c. 10.
d. 12.
e. 20.
92. Paul's Plumbing is a small business that employs 12 people. Which of the following is most likely to
be a fixed cost for Paul's Plumbing?
a. The tax and insurance payments on the property owned by the firm.
b. The wages paid to the 12 employees.
c. The payroll taxes on the wages of the 12 employees.
d. The salary paid to Paul, who is the manager of the firm.
STA: DISC: Costs of production TOP: Short-Run Cost Formulas
93. Which of the following is true about average fixed cost?

a. Average fixed cost has a U-shape, and marginal cost crosses average fixed cost at its
minimum point.
b. Average fixed cost does not vary as output increases.
c. Average fixed cost is the difference between marginal cost and average total cost.
d. Average fixed cost is total fixed cost divided by the quantity of output produced, and it
declines steadily as output increases.
94. Fixed costs are best defined as:

a. costs that do not vary with output.
b. costs that are at a minimum when output approaches the firm's capacity.
c. the amount that one more unit of output adds to total costs.
d. costs that decline as output increases.
95. Which of the following is most likely to be a fixed cost for a business?
a. expenditures on low-skill labor.
b. shipping charges for the delivery of products.
c. managerial salaries.
d. property taxes on the firm's buildings.
96. In the short run, if average variable cost equals $50, average total cost equals $75, and output equals
100, the total fixed cost must be:
a. $25. c. $5,000.
b. $2,500. d. $7,500.
97. The total fixed cost remains constant as which of the following varies?
a. Cost of resources. c. Output in a given period of time.
b. Time. d. Profit.
98. The total fixed cost curve:

a. varies with the quantity of inputs used.
b. decreases with output.
c. increases with output.
d. remains constant regardless of output.
99. Total fixed cost are costs that are fixed with respect to:
a. the rate of output. c. technology.
b. time. d. the minimum wage or price supports.
100. Bill is an accountant for a small machine shop. His boss has asked him to calculate the shop's total
fixed cost. Which method will get Bill the correct answer?
a. c and d.
b. Calculating the product of average total cost and quantity
c. Determining what the shop would pay for if they produced zero output
d. Subtracting the total variable costs from the total costs
e. Subtracting total variable costs from total revenue

a. TC = TFC − TVC.
b. AVC = TC / Q.
c. TFC = TC − TVC.
d. MC equals the change in ATC divided by the change in Q.
102. Which of the following is considered to be a fixed cost of operating an automobile?

a. Gasoline.
b. Tires.
c. Oil change.
d. Maintenance.
e. Registration fees.
103. Which of the following is an example of a fixed cost for a fishing company?
a. The cost of hiring a fishing crew.
b. The fuel costs of running the boat.
c. The monthly loan payment on the boat.
d. The supply of nets, hooks, and fishing lines.
e. Bait.
104. If average fixed costs equal $60 and average total costs equal $120 when output is 100, the total
variable cost must be:
a. $40. c. $6,000.
b. $60. d. $8,000.
105. Suppose that when output is 20, marginal cost is $20, and average total cost is $30. Then which of the
following is most likely to be true?
a. Average total cost is declining.
b. Average total cost is constant.
c. Average total cost is rising.
d. Average total cost is less than average fixed cost.
106. Which of the following best describes average variable cost?

a. The change in total cost when one additional unit of output is produced.
b. Total cost divided by the quantity of output produced.
c. Total variable cost divided by the quantity of output produced.
d. Total fixed cost divided by the quantity of output produced.
e. Costs that do not vary as output varies.
107. Which of the following is true if the total variable cost curve is rising?
a. Average fixed cost is increasing. c. Marginal cost is increasing.
b. Marginal cost is decreasing. d. Average fixed cost is constant.
108. If the total variable cost curve for a firm is S-shaped, what is the shape of the total cost curve for that
firm?
a. U-shaped
b. Flat.
c. Hill-shaped.
d. S-shaped.
e. There is not enough information.
109. Barbara owns a small shop where dresses are made. At the end of a given month, she has 250 dresses.
Her expenses for the month are $1,000 for rent, $6,000 for wages, $1,500 for fabric and thread, and
$500 for electricity. Her total variable costs for the month are:
a. c and e.
b. $4,000.
c. $32 per dress.
d. $7,500.
e. $8,000.
110. Suppose a firm has an output of 10,000 cans and a total fixed cost of $2,000. At an output of 5,000 the
difference between the total cost and the total variable cost is:
a. b and c.
b. $0.40.
c. the average fixed cost.
d. $2,000.
e. $0.20.
111. Which statement about the total variable cost curve is true?
a. It begins at the origin and increases before decreasing again.
b. The total variable cost curve is the same at all levels of output.
c. The total variable cost curve is increasing but at a decreasing rate.
d. It begins at the origin and is always increasing.
e. There is no such thing as a total variable cost curve.
112. Suppose a publisher faces the following costs of producing 10,000 newspapers each month: $5,500
cost of labor; $2,200 monthly mortgage payment; $250 cost of electricity to run the printing presses;
$800 for ink and paper; and $200 in city property taxes (based on the value of the building and land).
Its total variable costs are:
a. $8,950.
b. $8,750.
c. $6,550.
d. $6,300.
e. $5,500.
113. The total cost curve is the sum of the:

a. total fixed and total variable cost curves.
b. total fixed and marginal cost curves.
c. marginal cost and total variable cost curves.
d. none of these.
114. Which of the following is true if the total cost curve is rising?
a. Total fixed cost is decreasing. c. Marginal cost is decreasing.
b. Total fixed cost is increasing. d. Marginal cost is increasing.
115. What is the shape of the average fixed cost curve for a firm in the short run?
a. U-shaped.
b. A curve that constantly increases as output expands and eventually approaches infinity at
high rates of output.
c. A vertical line.
d. A curve that declines as output expands and approaches the horizontal-axis when output is
large.
116. Which of the following will become smaller and smaller as the firm expands output?
a. average total cost. c. marginal cost.
b. average fixed cost . d. total fixed cost.
117. The average fixed cost of a firm equal:

a. implicit costs divided by output.
b. explicit costs divided by output.
c. total cost minus variable cost.
d. total cost minus total variable cost divided by output.
118. When costs that vary with the level of output are divided by the output, you have calculated:
a. total changing cost. c. average fixed cost.
b. total fixed cost. d. average variable cost.
119. If fixed cost is $200,000 and variable cost is $30 per unit over the relevant range of output, when
10,000 units are produced, the average total cost will be:
a. $20. c. $50.
b. $30. d. $70.
120. Use the table below to answer the following question.
Units of Total Fixed Total Variable

Output Cost (dollars) Cost (dollars)
1 1,000 1,200
2 1,000 2,400
3 1,000 3,600
4 1,000 5,000
5 1,000 6,600
What is the average total cost at an output level of four units?

a. $1,200. c. $1,500.
b. $1,400. d. $2,000.
121. What is the shape of the average total cost curve for a firm in the short run?
a. U-shaped. c. A vertical line.
b. A horizontal line. d. A curve that slopes upward to the right.
122. Which of the following explains most accurately why the firm's short-run marginal cost curve will
eventually rise?
a. As more of the variable factor is used, its price will rise.
b. When diminishing marginal returns set in, it will take ever-larger quantities of the variable
resources to produce an additional unit of output.
c. As the variable factor is used more intensely, its marginal product will rise, causing an
increase in marginal costs.
d. As the size of the firm increases, the operational efficiency of the firm declines, causing an
increase in marginal costs.
123. Marginal cost is best defined as:

a. a cost that does not vary with the rate of output.
b. the difference between fixed and variable cost at any level of output.
c. the amount added to total cost when one more unit of output is produced.
d. the difference between price and average total cost at the profit-maximizing level of
output.
124. The change in total cost that results from the production of one additional unit is called:
a. marginal revenue. c. marginal cost.
b. average variable cost. d. average total cost.
125. Marginal cost is defined as the increase in total cost resulting from an increase in:
a. one unit of output. c. a firm's plant size.
b. output of 100 units. d. one unit of labor.
126. The minimum point on the marginal cost curve corresponds to the:
a. maximum point on the total cost curve.
b. minimum point on the total cost curve.
c. inflection point on the total variable cost curve.
d. midpoint of the total cost curve.
127. If both the marginal cost and the average variable cost curves are U-shaped. At the minimum point on
the average variable cost curve, the marginal cost must be:
a. greater than the average variable cost.
b. less than the average variable cost.
c. equal to the average variable cost.
d. at its minimum.
128. Which of the following is true at the point where diminishing returns set in?
a. Both marginal product and marginal cost are at a maximum.
b. Both marginal product and marginal cost are at a minimum.
c. Marginal product is at a maximum and marginal cost is at a minimum.
d. Marginal product is at a minimum and marginal cost is at a maximum.
129. Suppose the fixed cost of building a nuclear power plant is $1 billion. Suppose also that the only
variable cost is the labor of Homer Simpson, and he earns $10 per hour. If the plant generates 1,000
kilowatts each hour, and has already generated 1 billion kilowatts, what can you say about the
marginal cost of the next kilowatt?
a. b and e.
b. The marginal cost is equal to $.01.
c. The marginal cost is equal to $1.01.
d. The marginal cost is rising.
e. The marginal cost is falling.
130. The marginal cost is the:

a. b and c.
b. change in total cost as the quantity changes by one unit.
c. change in total variable cost as the quantity changes by one unit.
d. change in total fixed cost as the quantity changes by one unit.
e. same as the fixed cost when average fixed cost is at a minimum.
131. American Airlines makes numerous nonstop flights from Chicago's O'Hare Airport to the airport at
Dallas-Fort Worth. The distance between those two cities is 1,000 miles. The only variable cost, fuel,
costs $.06 for each passenger-mile it flies. Bob, on his way to an emergency business meeting, buys a
ticket in coach class for $1,300 at the very last minute. The marginal cost of flying Bob from Chicago
to Dallas-Fort Worth is:
a. b and e.
b. higher than the average cost of previous passengers.
c. $600.
d. $160.
e. $60.
132. When the cost curves have U-shapes, at the point where marginal cost equals average total cost:
a. b and c.
b. marginal cost is rising.
c. average total cost is at its minimum.
d. average variable cost is falling.
e. the fixed cost has been fully depreciated.
133. At the point where marginal cost equals average variable cost,
a. b and c.
b. marginal cost is rising.
c. average total cost is at its minimum.
d. average variable cost is falling.
e. there is no total cost.
134. When marginal cost is below average total cost:

a. total cost is falling.
b. total cost is rising.
c. average total cost is falling.
d. average fixed cost is rising.
e. total variable cost is falling.
135. A bus is mostly filled with passengers and ready to travel from Los Angeles to San Francisco. At the
last minute, a person comes running up to the bus and takes a seat. The change in the bus company's
total cost as a result of transporting one more passenger on this trip is called:
a. marginal cost.
b. average total cost.
c. variable cost.
d. fixed cost.
e. opportunity cost.
136. A firm estimates that when output is 10, its total costs are $900. It also finds that when output is 11, its
total costs are $920. The marginal cost of the eleventh unit of output is:
a. $1.
b. $20.
c. $90.
d. $900.
e. $920.
Exhibit 7-6 Total cost curves
137. In Exhibit 7-6, the total fixed cost is:

a. 0.
b. 1,000.
c. 3,000.
d. 5,000.
e. 6,000.
138. In Exhibit 7-6, the total cost of producing 6,000 units of output is:
a. 1,000.
b. 3,000.
c. 5,000.
d. 6,000.
e. 8,000.
Exhibit 7-7 Cost schedule for a firm
Quantity Total Cost Marginal Cost

0 $ 200
1 900
2 $900
3 3,000
139. In Exhibit 7-7, by filling in the blanks it can be determined that the fixed costs are:
a. 0.
b. 200.
c. 900.
d. 1,000.
e. 3,000.
140. In Exhibit 7-7, by filling in the blanks it can be determined that the total cost of the second unit of
output is:
a. 0.
b. 700.
c. 1,000.
d. 1,200.
e. 1,800.
141. In Exhibit 7-7, by filling in the blanks it can be determined that the marginal cost of the first unit of
output is:
a. 200.
b. 700.
c. 900.
d. 1,000.
e. 3,000.
142. In Exhibit 7-7, by filling in the blanks, it can be determined that the marginal cost of the third unit of
output is:
a. 0.
b. 200.
c. 700.
d. 1,200.
e. 2,000.
Exhibit 7-8 Costs schedules for producing pizza
Fixed Variable Total Marginal

Pizzas Cost Cost Cost Cost
0 $ $ $ $
1 5
2 13
3 10
4 100 140
5 20
6 85
7 215
143. By filling in the blanks in Exhibit 7-8, the fixed cost of producing 6 pizzas is shown to be equal to:
a. $100.
b. $150.
c. $200.
d. $185.
e. $85.
144. By filling in the blanks in Exhibit 7-8, the total cost of producing zero pizzas is shown to be equal to:
a. zero.
b. $100.
c. $5.
d. $105.
e. $95.
145. By filling in the blanks in Exhibit 7-8, the total cost of producing 3 pizzas is shown to be equal to:
a. $100.
b. $105.
c. $113.
d. $123.
e. $23.
146. By filling in the blanks in Exhibit 7-8, the total cost of producing 5 pizzas is shown to be equal to:
a. $100.
b. $105.
c. $113.
d. $123.
e. $160.
147. By filling in the blanks in Exhibit 7-8, the variable cost of producing 4 pizzas is shown to be equal to:
a. $100.
b. $40.
c. $60.
d. $85.
e. $185.
148. By filling in the blanks in Exhibit 7-8, the average variable cost of producing 4 pizzas is shown to be
equal to:
a. $10.
b. $15.
c. $20.
d. $40.
e. $85.
149. By filling in the blanks in Exhibit 7-8, the average total cost of producing 5 pizzas is shown to be equal
to:
a. $12.
b. $15.
c. $32.
d. $85.
e. $160.
150. By filling in the blanks in Exhibit 7-8, the marginal cost of the fourth pizza is shown to be equal to:
a. $10.
b. $15.
c. $17.
d. $23.
e. $40.
151. By filling in the blanks in Exhibit 7-8, the marginal cost of the sixth pizza is shown to be equal to:
a. $10.
b. $15.
c. $20.
d. $25.
e. $85.
Exhibit 7-9 Cost schedule for firm X
Output Total Fixed Total Variable

Quantity Cost Cost
0 $100 $ 0
1 100 50
2 100 84
3 100 108
4 100 127
5 100 150
152. As shown in Exhibit 7-9, the total cost of producing 4 units is:
a. zero. c. $250.
b. $227. d. $100.
153. As shown in Exhibit 7-9, the total cost of producing 5 units is:
a. zero. c. $250.
b. $227. d. $100.
154. As shown in Exhibit 7-9, the marginal cost of producing the third unit is:
a. $50. c. $24.
b. $16. d. $23.
Exhibit 7-10 Short-run cost schedule for book publisher's hourly production
Total Total Total

Output Variable Cost Cost
0 cases of books $ 0 $200
1 100 300
2 150 350
3 250 450
4 450 650
155. In Exhibit 7-10, the publisher's fixed cost is equal to:

a. $50. c. $200.
b. $100. d. $300.
156. In Exhibit 7-10, the average variable cost of producing 2 cases of books is:
a. $50 per case. c. $100 per case.
b. $75 per case. d. $150 per case.
157. In Exhibit 7-10, the marginal cost of increasing production from 2 to 3 cases of books is:
a. $100. c. $450.
b. $150. d. $800.
Exhibit 7-11 Short-run cost curves schedule for pizzeria's hourly production
Total Total Total

Product Variable Cost Cost
0 pizzas $ 0 $ 20
10 50 70
20 80 100
30 130 150
40 230 250
158. In Exhibit 7-11, the pizzeria's fixed cost is equal to:

a. $20. c. $50.
b. $30. d. $70.
159. In Exhibit 7-11, the average total cost or producing 40 pizzas per hour is equal to:
a. $5 per pizza. c. $6.25 per pizza.
b. $5.75 per pizza. d. $10 per pizza.
160. In Exhibit 7-11, what is the marginal cost of increasing production from 10 to 20 pizzas per hour?
a. $2 per pizza. c. $4 per pizza.
b. $3 per pizza. d. $5 per pizza.
Exhibit 7-12 Cost schedule for producing pizza
Fixed Variable Total

Pizzas Cost Cost Cost
0 $ $ $
1 48
2 17
3 27
4 78
5 40
6 64
7 80
161. By filling in the blanks in Exhibit 7-12, the AFC of 4 pizzas is shown to be equal to:
a. $10.
b. $9.50.
c. $19.50.
d. $40.
e. $78.
162. By filling in the blanks in Exhibit 7-12, the AFC of 3 pizzas is shown to be equal to:
a. $10.
b. $13.33.
c. $9.
d. $22.33.
e. $40.
163. By filling in the blanks in Exhibit 7-12, the AVC of 4 pizzas is shown to be equal to:
a. $10.
b. $9.50.
c. $19.50.
d. $40.
e. $78.
164. By filling in the blanks in Exhibit 7-12, the AVC of 3 pizzas is shown to be equal to:
a. $10.
b. $13.33.
c. $9.
d. $22.33.
e. $40.
165. By filling in the blanks in Exhibit 7-12, the ATC of 3 pizzas is shown to be equal to:
a. $10.
b. $13.33.
c. $9.
d. $22.33.
e. $40.
166. By filling in the blanks in Exhibit 7-12, the ATC of 4 pizzas is shown to be equal to:
a. $10.
b. $9.50.
c. $19.50.
d. $40.
e. $78.
167. By filling in the blanks in Exhibit 7-12, the marginal cost of the fourth pizza is shown to be equal to:
a. $10.
b. $11.
c. $12.
d. $13.
e. $14.
168. By filling in the blanks in Exhibit 7-12, the marginal cost of the third pizza is shown to be equal to:
a. $10.
b. $11.
c. $12.
d. $13.
e. $14.
Exhibit 7-13 Cost curves
169. In Exhibit 7-13, TFC is shown by the graph labeled:

a. I.
b. II.
c. III.
d. IV.
e. V.
170. In Exhibit 7-13, AFC is shown by the graph labeled:

a. I.
b. II.
c. III.
d. IV.
e. V.
171. In Exhibit 7-13, ATC is shown by the graph labeled:

a. I.
b. II.
c. III.
d. IV.
e. V.
172. Which of the following must be true if average total cost is rising?
a. Average fixed cost must be rising.
b. Total fixed cost must be rising.
c. Average variable cost must be falling.
d. Marginal cost must be greater than average total cost.
STA: DISC: Costs of production TOP: Marginal Cost Relationships

a. The law of diminishing returns states that beyond some point the marginal product of a
variable resource continues to rise.
b. The marginal product is the change in total output by adding one additional unit of a fixed
input.
c. Fixed costs are costs which vary with the output level.
d. When marginal productivity of a variable input is falling then marginal costs of production
must be rising.
e. When marginal cost is below average cost, average cost rises; when marginal cost is above
average cost, average cost falls.
174. Which of the following is true at the point where diminishing returns set in?
a. Both marginal product and marginal cost are at a maximum.
b. Both marginal product and marginal cost are at a minimum.
c. Marginal product is at a maximum and marginal cost at a minimum.
d. Marginal product is at a minimum and marginal cost at a maximum.
175. If total cost is $1,000 when output is zero, and total cost is $1,200 when output is one, and total cost is
$1,500 when output is two, then which of the following is true?
a. Total fixed cost is $1,500.
b. The marginal cost of producing the first unit of output is $1,200.
c. The marginal cost of producing the second unit of output is $300.
d. The average fixed cost is $750 when two units of output are produced.
176. Which of the following best describes marginal cost?

a. The change in total cost when one additional unit of output is produced.
b. Total cost divided by the quantity of output produced.
c. Total variable cost divided by the quantity of output produced.
d. Total fixed cost divided by the quantity of output produced.
e. Costs that do not vary as output varies, and that must be paid even if output is zero.
177. In the long run, total fixed cost will:

a. remain constant. c. decrease.
b. increase. d. not exist by definition.
STA: DISC: Costs of production TOP: Long-Run Production Costs
178. For a typical firm, the long-run average total cost curve:
a. is tangent to the minimum point of each possible short-run average total cost curves.
b. is tangent to each possible short-run average total cost curve at one point.
c. intersects each possible short-run average total cost curve at two points.
d. passes through the minimum points of all possible short-run average total cost curves.
179. Each potential short-run average total cost curve is tangent to the long-run average cost curve at:
a. the level of output that minimizes short-run average total cost.
b. the minimum point of the average total cost curve.
c. the minimum point of the long-run average cost curve.
d. a single point on the short-run average total cost curve.
180. When the curve that envelops the series of possible short-run average total cost curves is horizontal,
this means that there are:
a. economies of scale.
b. diseconomies of scale.
c. constant returns to scale.
d. diminishing returns.
e. some fixed factors of production.
181. If the minimum points of all the possible short-run average total cost curves become successively
lower as quantity of output increases, then:
a. the firm should try to produce less output.
b. total fixed costs are constant along the LRAC curve.
c. there are economies of scale.
d. the firm is probably having significant management problems.
e. when output is doubled, total costs are doubled.
182. A downward-sloping portion of a long-run average total cost curve is the result of:
a. economies of scale. c. diminishing returns.
b. diseconomies of scale. d. the existence of fixed resources.
STA: DISC: Costs of production TOP: Different Scales of Production
183. In the long run, firms in many industries often experience a falling average total cost curve as a result
of:
a. gains through trade. c. economies of scale.
b. increasing marginal returns. d. lower fixed costs.
184. A large aircraft manufacturer, like Boeing, may have a cost advantage over a new smaller
manufacturer because of:
a. diseconomies of scale.
b. economies of scale.
c. diminishing returns to a fixed factor of production.
d. the principal agent problem is generally less severe for larger firms.
185. Long-run economies of scale exist when the long-run average cost curve:
a. rises. c. falls.
b. remains constant. d. does not exist.
186. Long-run economies of scale exist over the range of output for which the long-run average cost curve:
a. is constant. c. is rising.
b. is falling. d. does not exist.
187. Economies of scale are created by greater efficiency of capital and by:
a. longer chains of command in management.
b. better wages for labor.
c. smaller plant sizes.
d. increased specialization of labor.
188. Economies of scale imply that within some range one can increase the size of operation and:
a. total cost will decrease.
b. fixed cost will decrease.
c. average total cost will decrease.
d. average total cost will increase.
e. average variable cost will decrease.
189. The decreasing portion of a firm's long run average cost curve is attributable to:
a. diminishing returns to scale.
b. increasing marginal cost.
c. economies of scale.
d. diseconomies of scale.
e. constant returns to scale.
190. Economies of scale can be caused by all of the following except:

a. price discounts for large scale purchases.
b. labor specialization.
c. use of more productive equipment.
d. increases in the firm's average total cost.
e. more cost-efficient methods of marketing.
191. Since the 1980s, Wal-Mart stores have appeared in almost every community in America. Wal-Mart
buys their goods in large quantities and therefore at cheaper prices. Wal-Mart also locates its stores
where land prices are low, usually outside of the community business district. Many customers shop at
Wal-Mart because of low prices and free parking. Local retailers, like the neighborhood drug store,
often go out of business because they lose customers. This story demonstrates that:
a. consumers are boycotting local retailers.
b. Wal-Mart engages in illegal acts of monopolization.
c. there are diseconomies of scale in retail sales.
d. there are economies of scale in retail sales.
e. Wal-Mart is managed by ruthless business people.
192. Which of the following is not a source of economies of scale?

a. Division and specialization of labor.
b. Increase in output.
c. More efficient use of capital.
d. All of the above.
e. Centralized marketing.
193. A car leasing company that expands its size by buying its competitors may run the risk of increasing
production cost per unit due to:
a. diseconomies of scale.
b. economies of scale.
c. diminishing returns.
d. greater use of large-volume purchases.
194. In the long run, a firm might experience rising per-unit cost due to:
a. economies of scale.
b. diseconomies of scale.
c. the law of supply.
d. the law of diminishing marginal returns.
195. Diseconomies of scale exist over the range of output for which the long-run average cost curve is:
a. constant. c. rising.
b. falling. d. subject to diminishing returns.
196. Diseconomies of scale exist over the range of output for which the long-run average cost curve is:
a. constant. c. rising.
b. falling. d. none of these.
197. If a firm enlarges its factory size and realizes higher average (per unit) costs of production then:
a. it has experienced economies of scale.
b. it has experienced diseconomies of scale.
c. it has experienced constant returns to scale.
d. the long-run average cost curve slopes downward.
e. the long-run average cost curve shifts upward.
198. The primary source of scale diseconomies appears to be:

a. a firm's inability to acquire quality resources.
b. too little demand for the firm's product.
c. consumers who resist dealing with large firms.
d. division of labor.
e. the organizational difficulties of managing an ever larger enterprise.
199. Diseconomies of scale exist for all of the following reasons except:
a. bureaucratic inefficiencies.
b. management problems.
c. failures in information flows.
d. firm size is too small.
e. organizational problems.
200. Suppose there is a technology to produce Grendels such that there are diseconomies of scale after the
first unit is produced. There are both fixed (a physical plant called a lair) and variable (food that grows
in lairs) costs of production. Which statement is true?
a. b and d.
b. Producing multiple units increases the average fixed cost.
c. There will be no more than one firm in this industry.
d. It is cheaper to make five Grendels by buying five lairs and producing one Grendel in each
lair than it is to produce five Grendels in one lair.
e. This is an impossible situation.
201. If a firm's long-run average cost curve is rising, it is experiencing:
a. a constant return to scale. c. diseconomies of scale.
b. economies of scale. d. none of these.
202. Constant returns to scale exist over the range of output for which the long-run average cost is:
a. neither rising or falling. c. rising.
b. falling. d. none of these.
203. Constant returns to scale cause the long-run average cost curve to be:
a. horizontal. c. upward-sloping.
b. vertical. d. downward-sloping.
Exhibit 7-14 Cost curves
204. In Exhibit 7-14, economies of scale only exist for output levels up to:
a. 1,000.
b. 2,000.
c. 3,000.
d. 4,000.
e. greater than 4,000.
205. In Exhibit 7-14, constant returns to scale only exist for output levels between:
a. 0 and 1,000.
b. 1,000 and 2,000.
c. 2,000 and 3,000.
d. 3,000 and 4,000.
e. 4,000 and infinity.
206. In Exhibit 7-14, a firm finds that it is experiencing numerous managerial and information problems.
The position of its short- and long-run average total cost curves suggest that it is operating at a
production level:
a. between 0 and 1,000.
b. between 1,000 and 2,000.
c. between 2,000 and 3,000.
d. between 3,000 and 4,000.
e. where it should shut down immediately.
207. In Exhibit 7-14, the U-shaped LRAC curve indicates which of the following as quantity increases from
0 to 4,000?
a. Diseconomies of scale; constant returns to scale; economies of scale.
b. Constant returns to scale; economies of scale; diseconomies of scale.
c. Economies of scale; constant returns to scale; diseconomies of scale.
d. Diseconomies of scale; economies of scale; constant returns to scale.
e. Economies of scale; diseconomies of scale; constant returns to scale.
Exhibit 7-15 Long-run average cost
208. In Exhibit 7-15, short-run average total cost, short-run marginal cost, and long-run average cost are all
equal at which level of output per week?
a. 500 units. c. 1,500 units.
b. 1,000 units. d. 2,000 units.
209. If the firm represented in Exhibit 7-15 is operating with a plant whose size corresponds to short-run
average total cost curve A, the level of output that would minimize its short-run average total cost is:
a. 500 units per week. c. 1,500 units per week.
b. 1,000 units per week. d. 2,000 units per week.
210. Given the short-run average total cost curves in Exhibit 7-15, what level of output per week minimizes
average total cost?
a. 500 units. c. 1,500 units.
b. 1,000 units. d. 2,000 units.
211. In Exhibit 7-15, economies of scale exist up to:

a. 500 units of output per week. c. 1,500 units of output.
b. 1,000 units of output per week. d. 2,000 units of output.
212. In Exhibit 7-15, diseconomies of scale are shown in the range of:
a. 0 to 500 units per week. c. 1,000 to 2,000 units per week.
b. 500 to 1,000 units per week. d. zero per week.
Exhibit 7-16 Long-run average cost curves

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The Project Gutenberg eBook of The books of
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Title: The books of Chronicles

With maps, notes and introduction
Author: W. A. L. Elmslie
Editor: A. F. Kirkpatrick
Release date: October 5, 2023 [eBook #71811]
Language: English
Original publication: Cambridge: University Press, 1916
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*** START OF THE PROJECT GUTENBERG EBOOK THE BOOKS

OF CHRONICLES ***
The Books of Chronicles
Transcriber’s Notes
The cover image was provided by the transcriber and is placed
in the public domain.
Punctuation has been standardized.
Most of the non-common abbreviations used to save space in

printing have been expanded to the non-abbreviated form
for easier reading.
This book was written in a period when many words had not
become standardized in their spelling. Words may have
multiple spelling variations or inconsistent hyphenation in
the text. These have been left unchanged unless indicated
with a Transcriber’s Note.
Index references have not been checked for accuracy.
The symbol ‘‡’ indicates the description in parenthesis has

been added to an illustration. This may be needed if there is
no caption or if the caption does not describe the image
adequately.
Footnotes are identified in the text with a superscript number

and are shown immediately below the paragraph in which
they appear.
THE CAMBRIDGE
BIBLE FOR SCHOOLS
AND COLLEGES
General Editor for the Old Testament:⁠—
A. F. KIRKPATRICK, D.D.
DEAN OF ELY
THE BOOKS OF
CHRONICLES
CAMBRIDGE UNIVERSITY PRESS
C. F. CLAY, Manager
London: FETTER LANE, E.C.

Edinburgh: 100 PRINCES STREET
New York: G. P. PUTNAM’S SONS
Bombay, Calcutta and Madras: MACMILLAN AND CO., Ltd.
Toronto: J. M. DENT AND SONS, Ltd.
Tokyo: THE MARUZEN-KABUSHIKI-KAISHA
All rights reserved
THE BOOKS OF
CHRONICLES
With Maps, Notes and Introduction
by
W. A. L. ELMSLIE, M.A.
Fellow of Christ’s College, Cambridge
Cambridge:
at the University Press
1916
First Edition 1899
Second Edition 1916
PREFACE
BY THE
GENERAL EDITOR FOR THE
OLD TESTAMENT
The present General Editor for the Old Testament
in the Cambridge Bible for Schools and Colleges
desires to say that, in accordance with the policy of
his predecessor the Bishop of Worcester, he does
not hold himself responsible for the particular
interpretations adopted or for the opinions expressed
by the editors of the several Books, nor has he
endeavoured to bring them into agreement with one
another. It is inevitable that there should be
differences of opinion in regard to many questions of
criticism and interpretation, and it seems best that
these differences should find free expression in
different volumes. He has endeavoured to secure, as
far as possible, that the general scope and character
of the series should be observed, and that views
which have a reasonable claim to consideration
should not be ignored, but he has felt it best that the
final responsibility should, in general, rest with the
individual contributors.
A. F. KIRKPATRICK.
Cambridge.
Stand ye still and see the salvation of the Lord with you,
O Judah and Jerusalem.
2 Chronicles xx. 17.
CONTENTS
I. Introduction
§ 1. Characteristics of Ancient Historical Writings
§ 2. Relation to Ezra and Nehemiah
§ 3. Date and Authorship
§ 4. Contents
§ 5. The Sources
§ 6. The Purpose and Method of the Chronicler
§ 7. The Historical Value of Chronicles
§ 8. The Religious Value of Chronicles
§ 9. Name and Position in the Canon
§ 10. Text and Versions of Chronicles
§ 11. Literature
II. Text and Notes

Index
Maps
Western Asia (Early Times)
Palestine
The Environs of Jerusalem
Jerusalem (Ancient)
PREFATORY NOTE
The author desires to acknowledge with gratitude
his indebtedness to Mr S. A. Cook for his kindness in
reading the first proofs and in making many most
valuable suggestions and criticisms, and to the
General Editor of the Series, the Dean of Ely, for his
very helpful revision of the proofs. His obligation to
Professor W. E. Barnes is referred to on p. lx.
W. A. L. E.
INTRODUCTION
§ 1: Characteristics of Ancient
Historical Writings
Until recent times the study of the historical records of Israel and
of other nations of antiquity has suffered from insufficient recognition
of the principles and procedure of ancient historians. It is obvious
that a great contrast exists between any modern historical work and
those books of the Old Testament which relate the fortunes of Israel;
and unless there is a clear perception of the main facts to which this
contrast is due, the nature and value of the Books of Chronicles
cannot readily be understood and certainly will not be properly
appreciated. It is desirable therefore to deal with this matter at the
outset, before proceeding to consider the special characteristics of
Chronicles.
(1) Standpoint. According to the modern point of view, a perfect

history would seem to be a complete and impartial statement of
events. This ideal is unattainable, for even the fullest account must
fall far short of the richness of actual life. Moreover, it is imperative
that the trivial be distinguished from the important, and the facts be
presented according to their relative values. A historian is therefore
necessary to arrange the material so that the events are seen in their
proper relationship. Thereby, however, a subjective element is
introduced into our histories. Life is so complex that two men
considering the same facts may reach very different conclusions
concerning them. We cannot wholly escape this danger, but we do
claim that the historian shall consciously seek to present the truth
and nothing but the truth. He must not deliberately suppress or
distort facts to favour (say) the Protestant or the Roman Catholic
view of the Reformation. A modern historian may be convinced that
sin leads to disaster, but he must not therefore write that a certain
wicked monarch perished dethroned and in misery, if he knows that
he died peacefully in his royal bed. If he wishes to enforce the
doctrine that “the wages of sin is death,” either he may turn to history
and select incidents which support that view, or he may invent
characters and weave them into a tale which points his moral, or he
may discuss the belief generally; but he ought not to publish as
serious history a work in which, irrespective of facts, every wicked
king is punished or involves his land in ruin. We should count such a
work an illegitimate use of historical material, unless the author gave
some clear indication of its real nature. We draw a sharp distinction
between history and fiction, and in the serious historian we demand
fidelity to the truth as he sees it.
This modern standpoint is in reality the outcome of that more

scientific habit of mind which insists above all things on accurate
observation of phenomena and on the subordination of theory to
fact. But the duty of scientific thinking has not so very long been
recognised by the human mind, and in former days many things
were legitimate and natural which would not be so now. The moment
we make allowance for our mental environment, we can conceive
that there might be other ideas than our own as to what constitutes
the use and abuse of historical records. To us the facts are primary,
and the lessons they seem to teach must be accepted, whether they
suit our wishes or not. But an ancient writer was not dominated by
that maxim. Supposing he desired to teach that “Virtue is rewarded,”
he might consider that an excellent way of enforcing his theory was
not only to use the narratives of the past, but to mould and modify
them as best suited his object. History might be made the tool of his
conviction, and the tool be shaped to assist his purpose. If it is hard
for us to realise that such a procedure was legitimate for him, that is
simply due to the difficulty we have in being anything except the
children of our own age.
The earliest historical records of Israel were not attempts to write

a continuous history of the people, but popular tales and songs
commemorating such deeds of the people or its heroes as had made
a profound impression on the popular imagination. An excellent
example is the famous Song of Deborah in Judges v. Records of this
type were long transmitted orally, but eventually were gathered
together into written collections, such as the Book of Jashar, referred
to by the canonical writers (see Joshua x. 13, 2 Samuel i. 18). As
national history lengthened out and State records accumulated in
connection with palace and temple, the idea would finally arise of
combining these with the popular memories so as to form a
connected historical narrative. But the motive which prompted the
formation of such accounts was not scientific interest nor even
perhaps curiosity to ascertain the exact course of events, but the
desire to interest, to instruct, and above all to edify contemporary
thought and life. Broadly, we may distinguish two types of ancient
historical writing; first, the descriptive narrative in which events were
recorded on account of their intense human interest, and, secondly,
the didactic, where the older descriptive tales and any other
available material were selected, related, and built into a unity in
such fashion as might best serve to bring out the religious, moral, or
political lessons which they seem to teach or which the writer was
anxious to impress upon his generation. The books of Samuel‒Kings
and of Chronicles both belong to the didactic type ¹. Thus, they
contain many stories (e.g. the details of Jehu’s revolution in Kings)
which teach no special lesson but are recorded for their intrinsic
interest; and also much annalistic record of fact. But this material has
been welded together by a writer or writers who were supremely
interested in the religious condition of their people, who believed that
the character and purpose of God were manifest in the vicissitudes
of their national history, and who desired to make the ethical and
spiritual import of that history clear to their fellow-men. Hence in their
present form their works are not scientific records but rather what
may be termed “history with a motive.” For instance, the space given
to the tales about Elisha the prophet compared with the brief allusion
to Omri King of Israel is entirely disproportionate to their respective
values in the political sphere. The books of Samuel and Kings are
practical and powerful appeals to history in the interests of religious
faith. The same is true of Chronicles, and to an even greater degree,
because Chronicles belongs to a later period than Samuel‒Kings
(see § 3), when the religious convictions of Israel were felt with
extraordinary intensity, and could be expressed in accordance with
certain precise theological beliefs.
¹ That both Samuel‒Kings and Chronicles can be classed as

didactic does not imply that they do not differ greatly in
character: the former books are “prophetic” and national,
relating God’s dealings with the nation as a whole, whilst
Chronicles gives an essentially priestly and ecclesiastical
view of the history.
(2) Method: the treatment of “sources.” It is of no less importance

to realise something of the difference of method between ancient
and modern historians, particularly as regards their treatment of
“sources.”
For all that lies beyond his personal experience the historian is, of
course, dependent on sources, documentary or otherwise. The
modern writer recognises the duty of testing and verifying the
accuracy of the sources he uses for his narrative, and in producing
his own account of affairs he is expected, where desirable, to state
the sources upon which he has relied. The ancient historian also
made use of sources, but (1) he used them uncritically, with little or
no anxiety concerning their accuracy, and (2) it was his custom
simply to select from the available material any passages, long or
short, even words or phrases, which served his purpose, and to
incorporate these in his work, frequently without any indication of the
borrowing. Only in certain instances was the source precisely
referred to. Moreover (3) the utmost freedom was exercised in
dealing with the passages thus chosen. Sometimes they were
reproduced word for word; at other times they were partially or
wholly transformed to suit the new context. This may seem an
unwarrantable procedure to us, but one has only to examine the
actual instances of these adaptations or transformations of unnamed
sources to perceive that the ancient ¹ writer has acted in perfect good
faith, with no suspicion that the manipulation was in any way
blameworthy. How indeed could it have been otherwise? The
science of literary criticism was unknown, “notions of literary
propriety and plagiarism had not been thought of, and writers who
advanced no pretensions to originality for themselves were guilty of
no imposture when they borrowed without acknowledgement from
their predecessors” (Skinner, Kings, p. 7).
¹ Nor need one go back to antiquity for an instance. Most

instructive examples of composite narrative compiled
uncritically but quite innocently by mediaeval chroniclers from
earlier sources may be found in Chapman’s Introduction to
the Pentateuch (in this series), pp. 260 ff. Compare also an
illustration from Arabic historical writings given by A. A. Bevan
in Cambridge Biblical Essays, pp. 12 ff.
For us there is both gain and loss in these methods of the ancient
writers, (a) Loss—because the continual adaptation of old tradition
has sometimes produced changes so great that it is difficult or even
impossible to discover now what was the actual course of events. By
the exercise of care and by the diligent application of the principles
of literary research the loss thus occasioned can be greatly
diminished, particularly where different accounts of the same period
have survived—e.g. in the parallel history of Judah in Samuel‒Kings
and in Chronicles. Not only do the two versions facilitate the task of
recovering the actual history, but each version throws light upon the
origin and nature of the other. (b) On the other hand, the practice of
incorporating passages of older narratives in the text is a great gain.
It is, of course, unfortunate that the writers did not more carefully
indicate the various sources they happened to be using; but
constantly—thanks to idiosyncrasies of style, language, and thought
—we are able to analyse the composite whole into its component
parts. From the study of the separate sources thus revealed we gain
invaluable information which would have been lost to us had the later
writer (or rather, compiler and editor) given his version of the history
entirely in his own words.
(3) The absence of the idea of Development. One other feature of

the ancient writers, at least of the chroniclers of Israel, is of singular
interest, and deserves special attention: it might be described as a
feature of their temperament or of their mental environment. The
idea of growth has become familiar to us, and we recognise that
there has been a process of development in our religious and social
institutions. We are content to trace the seeds of the present in the
past. But the feeling of antiquity was apparently different. In Israel, at
least, there was a tendency to suppose that the cherished system
and organisations of the present had sprung into existence, as it
were, full-grown at some great moment of the past. For example, by
the Chronicler’s time, the whole body of law and ritual embodied in
the final form of the Pentateuch had come to be ascribed in its
entirety to Moses, whereas historical and literary evidence
demonstrates beyond all question that the system of Jewish worship
and law was a gradual growth of which the stages can be traced with
considerable clearness. Similarly, many features in the organisation
of the Temple ministrants—the Priests, Levites, etc.—came into
existence only in post-exilic days; but the whole system as it
appeared in the Chronicler’s time was believed by him, and
doubtless also by his contemporaries, to have originated with King
David. Indeed, it is very probable that the ancients felt it so natural
and so necessary to justify important customs and institutions by
giving them the sanction of an ancient and honourable origin, that
occasionally the very ideals of the present were represented as facts
of the past. The converse of this tendency was also in force. As the
present sought the support of the authority of the past, so the past
could only continue to be deemed important provided it conformed to
some extent with the beliefs and ideals of the present. Ideas change
and expand. Thus it was quite impossible in the Chronicler’s time to
represent the age of David and Solomon as great and glorious
unless the moderate figures given in Kings were altered to
correspond with the ideas of men accustomed to think of the mighty
armies of the Persian monarchs or of Alexander the Great. As
Kuenen says, “In ancient times, and specifically in Israel, the sense
of historic continuity could only be preserved by the constant
compliance on the part of the past with the requirements of the
present, that is to say by the constant renovation and transformation
of the past. This may be called the Law of religious historiography”
(The Modern Review, vol. i. [1880], p. 705).
One consequence of the first importance follows from this fact.

An ancient historical writing often records unconsciously far more
than the history of the period it purports to describe. Since much in it
which is ascribed to a past age in reality reflects the conditions of the
present, it follows that the work as a whole may be an invaluable
commentary on the author’s own period. By taking into account this
law of religious historiography, by studying the writer’s method of
compilation, his use and manipulation of sources and the additions
he has himself made to the story, we shall find in the completed book
a mirror of the thoughts, the ideals, and the conditions of the age
when it was produced.
Justification for these remarks can be drawn not only from the
writings of the Old Testament but also from the study of ancient
literature in general. Nowhere, however, are the principles and
characteristics which we have outlined more clearly exemplified than
in the books of Chronicles. They are the key to the comprehension of
Chronicles; and, if they are borne in mind, what is generally
considered a somewhat dull book of the Bible will be seen to be one
of the most instructive pieces of ancient literature. At the same time,
we shall be in a position to perceive and appreciate the religious
enthusiasm which animated the Chronicler.
§ 2. Relation to Ezra and Nehemiah

It is well known that the books of Ezra and Nehemiah were
originally one book; but further it is certain that Chronicles has been
artificially separated from them, and that the three books,
Chronicles-Ezra-Nehemiah, were once a continuous work. The
reasons upon which this conclusion is based are as follows:
(1) The ending of Chronicles and the beginning of Ezra are the
same (2 Chronicles xxxvi. 22 f. = Ezra i. 1‒3a), i.e. after the
separation was made between Chronicles and Ezra‒Nehemiah the
opening verses of Ezra (recording the proclamation of Cyrus
permitting the Jews to return) were retained, or perhaps one should
say, were added by someone who was aware of the original
continuity of Chronicles with Ezra‒Nehemiah and who was anxious
that Chronicles should end in a hopeful strain (see note on 2
Chronicles xxxvi. 23). The desirability of securing a hopeful
conclusion is much more obvious in the Hebrew than in the English
Bible, for, whereas in the English order Ezra immediately follows
Chronicles, in the Hebrew Canon Ezra and Nehemiah are made to
precede Chronicles, and Chronicles is actually the last book of the
Hebrew Bible. (On the reason for this order in the Hebrew, and
generally on the separation of Chronicles from Ezra‒Nehemiah, see
§ 9, Position in the Canon, ad fin.)
(2) The same general standpoint and the same special interests
are found both in Chronicles and Ezra‒Nehemiah to a remarkable
degree. In particular, attention may be called to the following points:
(a) The same fondness for lists and genealogies is shown in

both works; compare e.g. 1 Chronicles xii. with Ezra ii. or
Nehemiah iii.; and 2 Chronicles xxxi. 16‒19 with Nehemiah
vii. 63‒65.
(b) The same intense interest in religious festivals and

institutions; compare 1 Chronicles xv., xvi.; 2 Chronicles v.‒
vii., xxix., xxx., xxxv. 1‒19, with Ezra iii., vi. 16‒22; Nehemiah
viii.
(c) Three classes of Temple attendants, viz. Levites, singers,
and porters, which are barely mentioned in the rest of the Old
Testament, receive a great deal of notice both in Chronicles
and in Ezra‒Nehemiah.
(3) The same style and diction are found in both works (excepting
of course in such sentences and passages as are transcribed from
older sources). Characteristic phrases are the following:
(a) “Fathers’ houses”; compare 1 Chronicles vii. 2, note.
(b) “The house of God,” very frequently in Chronicles‒Ezra‒

Nehemiah in place of the usual “house of the Lord”
(Jehovah). With this compare the avoidance of the use of the
name Jehovah (Jahveh) in such places as 2 Chronicles xvii. 4
(compare Authorized Version with Revised Version), xx. 12,
30; Ezra viii. 18, 21.
(c) “genealogy” (“reckon by genealogy”); compare 1 Chronicles

v. 17, note; Ezra ii. 62.
(d) “to oversee”; 1 Chronicles xxiii. 4; 2 Chronicles ii. 2 [ii. 1

Hebrew]; Ezra iii. 8 (Revised Version “to have the oversight”).
(e) “willingly offer”; 1 Chronicles xxix. 14; Ezra i. 6.
These are merely a few instances out of very many which might
be given. This similarity of style and language is far more striking in
the Hebrew (compare § 3, C, and for full particulars the long list in
Curtis, Chronicles, pp. 27 ff.).
When fully stated, the evidence indicated under (2) and (3) above
is of a convincing character, and the conclusion that Chronicles‒
Ezra‒Nehemiah were at one time a single work should be
unhesitatingly adopted.
§ 3. Date and Authorship
(1) Date and Unity. The scope of our inquiry in this section
requires to be defined with some care. In dealing with any work
which is chiefly a compilation of older material, it is necessary clearly
to distinguish between the dates of the various sources which can be
recognised or surmised and the dates of the writer or writers who
have effected the compilation. When we examine the structure of
Chronicles its composite nature is at once evident. Many long and
important passages have been taken, with or without adaptation,
directly from the existing books of Scripture. The date of all such
passages, of course, falls to be considered in the commentaries on
Samuel or Kings or wherever their original setting may be. The
remainder of Chronicles presents an intricate but interesting
problem. It has been held that there are no sources involved in this
remaining portion but that the whole is the free composition of the
writer who quoted or adapted the passages from earlier books of
Scripture referred to above. According to the view taken in this
volume, sources other than these “canonical” books were utilised in
the formation of Chronicles, although for reasons suggested in § 5
(q.v., pp. xxxvi f.) such sources are not easy to distinguish from the
work of the compiler himself. The little which can be said regarding
the origin and history of these supposed sources may conveniently
be reserved for the section dealing with the Sources (§ 5). The
question, therefore, which is before us in this section is the date of
the editorial process to which we owe the present form of Chronicles.
Fortunately the answer is simplified by one important fact, namely
the remarkable homogeneity of Chronicles‒Ezra‒Nehemiah. To such
a degree are these books characterised by unity of style, vocabulary,
standpoint and purpose (see below; also § 2 and § 6), that we may
safely conclude they are essentially the product of one mind: they
have reached substantially their present form in the course of a

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1. Which of the following is an explicit cost?

2. Explicit costs would include:

3. Unlike implicit costs, explicit costs:

5. Which of the following is not an explicit cost?

9. Which of the following would be considered an implicit cost?

11. Payments to nonowners of a firm are called:

13. Implicit costs are best thought of as:

14. Which of the following is an implicit cost of going to college?

19. Implicit costs are:

23. Economic profit is:

28. Economic profit is:

30. Economic profit equals accounting profit minus:

36. Normal profit is defined as a(n):

37. Economists say that a firm has a normal profit when:

38. Which of the following is an example of a fixed input?

39. Variable inputs are defined as any resource that:

42. The short run is a time period such that:

43. The short run is a period of time:

47. The long run is a period of:

48. The long run is a period of time:

49. The long run is a planning period:

50. In the long run, total fixed cost:

51. Which of the following statements is true?

53. Which of the following best describes a production function?

62. Marginal product measures the change in:

Exhibit 7-1 Production of pizza data

Exhibit 7-2 Cost schedule for pizza production

Labor Energy Materials

75. Which of the following is an implication of the law of diminishing returns?

79. Applying a price of labor to the law of diminishing returns generates:

Exhibit 7-3 A marginal product curve

Exhibit 7-4 A marginal product curve

Exhibit 7-5 Workers and output data

93. Which of the following is true about average fixed cost?

94. Fixed costs are best defined as:

98. The total fixed cost curve:

101. Which of the following statements is true?

102. Which of the following is considered to be a fixed cost of operating an automobile?

106. Which of the following best describes average variable cost?

113. The total cost curve is the sum of the:

117. The average fixed cost of a firm equal:

120. Use the table below to answer the following question.

Units of Total Fixed Total Variable

What is the average total cost at an output level of four units?

123. Marginal cost is best defined as:

130. The marginal cost is the:

134. When marginal cost is below average total cost:

137. In Exhibit 7-6, the total fixed cost is:

Exhibit 7-7 Cost schedule for a firm

Quantity Total Cost Marginal Cost

Exhibit 7-8 Costs schedules for producing pizza

Fixed Variable Total Marginal

Exhibit 7-9 Cost schedule for firm X

Output Total Fixed Total Variable

Total Total Total

155. In Exhibit 7-10, the publisher's fixed cost is equal to:

Total Total Total

158. In Exhibit 7-11, the pizzeria's fixed cost is equal to:

Exhibit 7-12 Cost schedule for producing pizza

Fixed Variable Total