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1. The reason economists assume that firms try to maximize economic profit is that:
a. firms that don't earn profits will, over time, have difficulty securing financing to survive.
b. firms in the real world always maximize profit.
c. profit is easier to calculate than revenue.
d. if a firm fails to earn a profit in its first year, it will go out of business.
e. profit maximization is easier for firms than revenue maximization.
ANSWER: a
FEEDBACK: a. Correct. Firms try to earn a profit by transforming resources into salable products.
Over time, only profitable firms survive in the market. See 7-1: Cost and Profit
b. Incorrect. Firms try to earn a profit by transforming resources into salable
products. Over time, only profitable firms survive in the market. See 7-1: Cost and
Profit
c. Incorrect. Firms try to earn a profit by transforming resources into salable
Profit
d. Incorrect. Firms try to earn a profit by transforming resources into salable
Profit
e. Incorrect. Firms try to earn a profit by transforming resources into salable
Profit
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: MICR.MCEACH.17.07.01 - Distinguish the three types of profit and explain what each
reflects
NATIONAL STANDARDS: United States - BUSPROG: Analytic - Communication Abilities
TOPICS: Cost and Profit
KEYWORDS: Bloom's: Remember
2. Which of the following is not an explicit cost?

a. Salaries
b. Sales taxes
c. The cost of utilities, such as gas and electricity
d. Insurance premiums
e. The value of a firm owner's time
ANSWER: e
FEEDBACK: a. Incorrect. A firm’s explicit costs are its actual cash payments for resources:
wages, rent, interest, insurance, taxes, and the like. See 7-1: Cost and Profit
b. Incorrect. A firm’s explicit costs are its actual cash payments for resources:
c. Incorrect. A firm’s explicit costs are its actual cash payments for resources:
d. Incorrect. A firm’s explicit costs are its actual cash payments for resources:
e. Correct. A firm’s explicit costs are its actual cash payments for resources: wages,
rent, interest, insurance, taxes, and the like. See 7-1: Cost and Profit
POINTS: 1
DIFFICULTY: Easy
Copyright Cengage Learning. Powered by Cognero. Page 1
reflects
3. Suppose Ripco owns the building from which it operates. If:

a. the firm pays no rent, there is no opportunity cost.
b. the firm does not rent the building to anyone else, there is no opportunity cost.
c. the firm pays rent, there is an opportunity cost.
d. its usage of the building precludes it from renting to anyone else, there is an opportunity cost.
e. the firm can use the building for other things, there is no opportunity cost.
ANSWER: d
FEEDBACK: a. Incorrect. Whether hired in resource markets or owned by a firm, all resources
have an opportunity cost. See 7-1: Cost and Profit
b. Incorrect. Whether hired in resource markets or owned by a firm, all resources
c. Incorrect. Whether hired in resource markets or owned by a firm, all resources
d. Correct. Whether hired in resource markets or owned by a firm, all resources
e. Incorrect. Whether hired in resource markets or owned by a firm, all resources
POINTS: 1
DIFFICULTY: Moderate
reflects
KEYWORDS: Bloom's: Understand
4. Which of the following are implicit costs for a typical firm?

a. Insurance costs
b. Electricity costs
c. The opportunity costs of the capital owned and used by the firm
d. The cost of the labor hired by the firm
e. The cost of raw materials
ANSWER: c
FEEDBACK: a. Incorrect. Implicit costs are the opportunity costs of using resources owned by the
firm or provided by the firm’s owners. See 7-1: Cost and Profit
b. Incorrect. Implicit costs are the opportunity costs of using resources owned by the
c. Correct. Implicit costs are the opportunity costs of using resources owned by the
d. Incorrect. Implicit costs are the opportunity costs of using resources owned by the
e. Incorrect. Implicit costs are the opportunity costs of using resources owned by the
POINTS: 1

reflects
5. Cash payments for steel to be used in the production process would be an example of _____.
a. sunk costs
b. fixed costs
c. explicit costs
d. implicit costs
e. entrepreneurial costs
ANSWER: c
wages, rent, interest, insurance, taxes, and the like. Implicit costs are the
opportunity costs of using resources owned by the firm or provided by the firm’s
owners. See 7-1: Cost and Profit
c. Correct. A firm’s explicit costs are its actual cash payments for resources: wages,
rent, interest, insurance, taxes, and the like. Implicit costs are the opportunity
costs of using resources owned by the firm or provided by the firm’s owners. See
7-1: Cost and Profit
e. Incorrect. A firm’s explicit costs are its actual cash payments for resources:
POINTS: 1
reflects
6. A firm's opportunity costs of using resources provided by the firm's owners are called _____.
a. sunk costs
b. fixed costs
c. explicit costs
d. implicit costs
e. entrepreneurial costs
ANSWER: d

c. Incorrect. Implicit costs are the opportunity costs of using resources owned by the
d. Correct. Implicit costs are the opportunity costs of using resources owned by the
POINTS: 1
DIFFICULTY: Easy
reflects
7. Unlike implicit costs, explicit costs:

a. reflect opportunity costs.
b. include the value of the owner's time.
c. are not included in a firm’s accounting statements.
d. are actual cash payments.
e. do not change as a firm's output changes.
ANSWER: d
FEEDBACK: a. Incorrect. Explicit costs are actual cash payments for resources, while implicit
costs are the opportunity costs of using resources owned by a firm. See 7-1: Cost
and Profit
b. Incorrect. Explicit costs are actual cash payments for resources, while implicit
and Profit
c. Incorrect. Explicit costs are actual cash payments for resources, while implicit
and Profit
d. Correct. Explicit costs are actual cash payments for resources, while implicit costs
are the opportunity costs of using resources owned by a firm. See 7-1: Cost and
Profit
e. Incorrect. Explicit costs are actual cash payments for resources, while implicit
and Profit
POINTS: 1
reflects
8. An implicit cost is:

a. any cost a firm cannot avoid in the short run.
b. any expenditure a firm makes.
c. an opportunity cost.
d. accurately measured in accounting statements.
e. ignored by economists.
ANSWER: c
c. Correct. Implicit costs are the opportunity costs of using resources owned by the
POINTS: 1
DIFFICULTY: Easy
reflects
9. The opportunity cost of a resource:

a. includes both explicit and implicit cost.
b. includes explicit cost only.
c. includes implicit cost only.
d. is equal to the market price of the resource.
e. is not related to the market price of the resource.
ANSWER: a
FEEDBACK: a. Correct. Both explicit and implicit costs are opportunity costs. Explicit costs are
actual cash payments for resources, while implicit costs are the opportunity costs
of using resources owned by a firm. See 7-1: Cost and Profit
b. Incorrect. Both explicit and implicit costs are opportunity costs. Explicit costs are
c. Incorrect. Both explicit and implicit costs are opportunity costs. Explicit costs are
d. Incorrect. Both explicit and implicit costs are opportunity costs. Explicit costs are
e. Incorrect. Both explicit and implicit costs are opportunity costs. Explicit costs are
POINTS: 1
DIFFICULTY: Easy
reflects

10. Explicit costs are:

a. not part of opportunity costs.
b. the only costs considered in opportunity costs.
c. exactly the same as implicit costs.
d. actual monetary payments for resources purchased.
e. the opportunity costs of using resources owned by the firm.
ANSWER: d
and Profit
and Profit
and Profit
Profit
and Profit
POINTS: 1
DIFFICULTY: Easy
reflects
11. John moved his office from a building he was renting downtown to the carriage house he owns behind his house.
Which of the following statements shows how his costs change?
a. Both his explicit and implicit costs will rise.
b. His explicit costs will rise, while his implicit costs will fall.
c. Both his explicit and implicit costs will fall.
d. His explicit costs fall, while his implicit costs will rise.
e. His explicit costs will rise, while his implicit costs will remain the same.
ANSWER: d
and Profit
and Profit
and Profit
Profit
and Profit
POINTS: 1
DIFFICULTY: Challenging
reflects
NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking
KEYWORDS: Bloom's: Apply
12. 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 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. The chef’s explicit costs are equal to_____.
a. $26,000
b. $66,000
c. $78,000
d. $52,000
e. $72,000
ANSWER: d
c. Incorrect. A firm’s explicit costs are its actual cash payments for resources:
d. Correct. A firm’s explicit costs are its actual cash payments for resources: wages,
POINTS: 1
reflects
$20,000 a year, and take over a storage 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. The chef’s implicit costs are equal
to _____.
a. $26,000
b. $66,000
c. $78,000
d. $52,000
e. $72,000
ANSWER: a
FEEDBACK: a. Correct. Implicit costs are the opportunity costs of using resources owned by the
POINTS: 1
reflects
14. 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 wages
b. Sam's time
c. Diane's tips
d. Sam's tips
e. Both Diane's and Sam's tips
ANSWER: b
b. Correct. Implicit costs are the opportunity costs of using resources owned by the
POINTS: 1
reflects
15. Maryann and Don want to open their own deli. To do so, Maryann must give up her job, where she earns $20,000 per
year, and Don must give up his part-time job, where he earns $10,000 per year. They must liquidate their money market
fund, which earns $1,000 interest annually. The rent on the building is $10,000 per year, and the expenses of such
necessities as utilities, corned beef, and pickles are $35,000 annually. _____ is the explicit cost per year of operating the
deli.
a. $10,000
b. $35,000
c. $45,000
d. $31,000
e. $76,000
ANSWER: c
POINTS: 1
reflects
16. Amanda, age 6, opens a lemonade stand. She makes all the lemonade from a mix she found in her parents' pantry. Her
stand is an old box she found in the garage. The pitcher and paper cups were taken from the kitchen. Which of the
following is true?
a. The opportunity cost of the lemonade is zero.
b. The only opportunity cost of the lemonade is Amanda's time.
c. Amanda's explicit costs are zero.
d. The implicit costs of Amanda's lemonade are zero.
e. Whatever revenue Amanda gets will be pure economic profit.
ANSWER: c
rent, interest, insurance, taxes, and the like. Implicit costs are the opportunity
costs of using resources owned by the firm or provided by the firm’s owners. See
POINTS: 1
reflects
17. Which of the following would not appear on a firm's accounting statement?
a. Sunk costs
b. Fixed costs
c. Explicit costs
d. Implicit costs
e. Insurance costs
ANSWER: d
FEEDBACK: a. Incorrect. Implicit costs require no cash payment and no entry in the firm’s
accounting statement. See 7-1: Cost and Profit
b. Incorrect. Implicit costs require no cash payment and no entry in the firm’s
c. Incorrect. Implicit costs require no cash payment and no entry in the firm’s
d. Correct. Implicit costs require no cash payment and no entry in the firm’s
e. Incorrect. Implicit costs require no cash payment and no entry in the firm’s
POINTS: 1
reflects
18. Accounting profit equals:

a. explicit costs minus implicit costs.
b. economic profit minus implicit costs.
c. economic profit minus explicit costs.
d. economic profit minus explicit costs and implicit costs.
e. economic profit plus implicit costs.
ANSWER: e
FEEDBACK: a. Incorrect. Accounting profit equals total revenue minus explicit costs, while
economic profit equals total revenue minus all costs, both implicit and explicit.
See 7-1: Cost and Profit
b. Incorrect. Accounting profit equals total revenue minus explicit costs, while
c. Incorrect. Accounting profit equals total revenue minus explicit costs, while
d. Incorrect. Accounting profit equals total revenue minus explicit costs, while
e. Correct. Accounting profit equals total revenue minus explicit costs, while
POINTS: 1
reflects
19. The difference between a firm's total revenue and what must be paid to attract resources from their best alternative use
is called _____.
a. total revenue
b. utility
c. economic profit
d. cost
e. production efficiency
ANSWER: c
FEEDBACK: a. Incorrect. Economic profit equals total revenue minus all costs, both implicit and
explicit. See 7-1: Cost and Profit
b. Incorrect. Economic profit equals total revenue minus all costs, both implicit and
c. Correct. Economic profit equals total revenue minus all costs, both implicit and
d. Incorrect. Economic profit equals total revenue minus all costs, both implicit and
e. Incorrect. Economic profit equals total revenue minus all costs, both implicit and
POINTS: 1
DIFFICULTY: Easy
reflects
20. Opportunity cost usually:

a. cannot be measured.
b. applies to labor but not to capital.
c. is involved in calculating economic profit.
d. is greater than the cash payment made to a resource.
e. is less than the cash payment made to a resource.
ANSWER: c
FEEDBACK: a. Incorrect. Economic profit takes into account the opportunity cost of all resources
used in production. See 7-1: Cost and Profit
b. Incorrect. Economic profit takes into account the opportunity cost of all resources
c. Correct. Economic profit takes into account the opportunity cost of all resources
d. Incorrect. Economic profit takes into account the opportunity cost of all resources
e. Incorrect. Economic profit takes into account the opportunity cost of all resources
POINTS: 1
DIFFICULTY: Easy
reflects
21. Economic profit is defined as _____.

a. total fixed cost plus total variable cost
b. total revenue minus marginal costs
c. average revenue minus average variable cost
d. total revenue minus total costs
e. marginal revenue minus opportunity costs
ANSWER: d
c. Incorrect. Economic profit equals total revenue minus all costs, both implicit and
d. Correct. Economic profit equals total revenue minus all costs, both implicit and
POINTS: 1
DIFFICULTY: Easy
reflects

22. Economic profit is defined as _____.
a. total revenue minus implicit costs
b. total revenue plus explicit costs
c. total revenue plus implicit costs
d. wages plus interest minus rent
e. total revenue minus implicit and explicit costs
ANSWER: e
e. Correct. Economic profit equals total revenue minus all costs, both implicit and
POINTS: 1
DIFFICULTY: Easy
reflects
23. Which of the following would be shown on a firm’s accounting statement?

a. Revenue, implicit costs, explicit costs, and economic profit
b. Revenue, implicit costs, explicit costs, and accounting profit
c. Revenue, explicit costs, and economic profit
d. Revenue, explicit costs, and accounting profit
e. Revenue, implicit costs, and accounting profit
ANSWER: d
FEEDBACK: a. Incorrect. Accounting profit appears on a firm’s accounting statement; it is
calculated as total revenue minus the explicit costs. See 7-1: Cost and Profit
b. Incorrect. Accounting profit appears on a firm’s accounting statement; it is
c. Incorrect. Accounting profit appears on a firm’s accounting statement; it is
d. Correct. Accounting profit appears on a firm’s accounting statement; it is
e. Incorrect. Accounting profit appears on a firm’s accounting statement; it is
POINTS: 1
DIFFICULTY: Easy
reflects

24. Maryann and Don want to open their own deli. To do so, Maryann must give up her job, where she earns $20,000 per
year, and Don must give up his part-time job, where he earns $10,000 per year. They must liquidate their money market
fund, which earns $1,000 interest annually. The rent on the building is $10,000 per year, and the expenses of such
necessities as utilities, corned beef, and pickles are $35,000 annually. The minimum amount of revenue per year that
would make it worthwhile, financially, for Maryann and Don to run the deli is _____.
a. $10,000
b. $35,000
c. $45,000
d. $31,000
e. $76,000
ANSWER: e
FEEDBACK: a. Incorrect. To make running the deli worthwhile, the deli has to cover its explicit
and implicit costs. See 7-1: Cost and Profit
b. Incorrect. To make running the deli worthwhile, the deli has to cover its explicit
c. Incorrect. To make running the deli worthwhile, the deli has to cover its explicit
d. Incorrect. To make running the deli worthwhile, the deli has to cover its explicit
e. Correct. To make running the deli worthwhile, the deli has to cover its explicit and
implicit costs. See 7-1: Cost and Profit
POINTS: 1
DIFFICULTY: Easy
reflects
25. Suppose Ernie gives up his job as financial advisor for P.E.T.S., where he earned $30,000 per year, to open up a store
selling pet-care products. He invested $10,000 in the store, which were originally savings that earned 5 percent interest.
This year, the revenue from the new business was $50,000 and the explicit costs were $10,000. The accounting profit
earned by Ernie was _____.
a. $10,000
b. $50,000
c. $20,000
d. $40,000
e. $9,500
ANSWER: d
FEEDBACK: a. Incorrect. Accounting profit equals total revenue minus explicit costs. See 7-1:
Cost and Profit
b. Incorrect. Accounting profit equals total revenue minus explicit costs. See 7-1:
Cost and Profit
c. Incorrect. Accounting profit equals total revenue minus explicit costs. See 7-1:
Cost and Profit
d. Correct. Accounting profit equals total revenue minus explicit costs. See 7-1: Cost
and Profit

e. Incorrect. Accounting profit equals total revenue minus explicit costs. See 7-1:
Cost and Profit
POINTS: 1
reflects
26. Suppose Ernie gives up his job as financial advisor for P.E.T.S., where he earned $30,000 per year, to open up a store
selling pet-care products. He invested $10,000 in the store, which were originally savings that earned 5 percent interest.
This year, the revenue from the new business was $50,000 and the explicit costs were $10,000. The economic profit
earned by Ernie was _____.
a. $10,000
b. $50,000
c. $20,000
d. $40,000
e. $9,500
ANSWER: e
POINTS: 1
reflects
27. A firm’s accounting profit is equal to _____.

a. total revenue minus opportunity costs
b. total revenue plus opportunity costs
c. total revenue minus imputed costs
d. total revenue minus explicit costs
e. total revenue minus explicit and implicit costs
ANSWER: d
Cost and Profit
Cost and Profit
c. Incorrect. Accounting profit equals total revenue minus explicit costs. See 7-1:
Cost and Profit
d. Correct. Accounting profit equals total revenue minus explicit costs. See 7-1: Cost
and Profit
Cost and Profit
POINTS: 1
DIFFICULTY: Easy
reflects
28. Economic profit is defined as:

a. total revenue minus price.
b. price minus quantity.
c. total revenue minus what must be paid to resources to attract them from their best alternative use.
d. total revenue divided by what must be paid to resources to attract them from their best alternative use.
e. total revenue plus what must be paid to resources to attract them from their best alternative use.
ANSWER: c
c. Correct. Economic profit equals total revenue minus all costs, both implicit and
POINTS: 1
DIFFICULTY: Easy
reflects
29. A firm’s economic profit is equal to _____.

a. total revenue minus accounting profit
b. total revenue minus explicit costs
c. total revenue plus accounting profit
d. total revenue plus opportunity costs
e. accounting profit minus implicit costs
ANSWER: e
POINTS: 1
DIFFICULTY: Easy
reflects
30. Accounting profit is:

a. always less than economic profit.
b. never less than economic profit.
c. equal to economic profit if a normal profit is earned.
d. less than economic profit only when implicit costs are greater than explicit costs.
e. greater than economic profit only when implicit costs are greater than explicit costs.
ANSWER: b
FEEDBACK: a. Incorrect. Economic profit includes both explicit and implicit costs, while
accounting profit includes explicit costs. See 7-1: Cost and Profit
b. Correct. Economic profit includes both explicit and implicit costs, while accounting
profit includes explicit costs. See 7-1: Cost and Profit
c. Incorrect. Economic profit includes both explicit and implicit costs, while
d. Incorrect. Economic profit includes both explicit and implicit costs, while
e. Incorrect. Economic profit includes both explicit and implicit costs, while
POINTS: 1
DIFFICULTY: Easy
reflects
31. Suppose Ben buys out Jerry's ownership in a firm but retains him as a salaried employee. Jerry gets a salary equal to
the value of the share that he held in the firm. In this case, which of the following statements is true?
a. The firm’s economic profit increases.
b. The firm’s economic profit decreases.
c. There is no change in the economic profit of the firm.
d. There is no change in the accounting profit of the firm.

e. The firm’s accounting profit increases.
ANSWER: c
FEEDBACK: a. Incorrect. Accounting profit is calculated as revenue minus explicit cost.
Economic profit is calculated as revenue minus implicit and explicit costs. In this
case, the implicit cost declines and the explicit cost increases by the same
amount. See 7-1: Cost and Profit
b. Incorrect. Accounting profit is calculated as revenue minus explicit cost.
c. Correct. Accounting profit is calculated as revenue minus explicit cost. Economic
profit is calculated as revenue minus implicit and explicit costs. In this case, the
implicit cost declines and the explicit cost increases by the same amount. See 7-
1: Cost and Profit
d. Incorrect. Accounting profit is calculated as revenue minus explicit cost.
e. Incorrect. Accounting profit is calculated as revenue minus explicit cost.
POINTS: 1
reflects
32. Normal profit is defined as:

a. accounting profit.
b. economic profit.
c. the profit necessary to ensure that opportunity costs are covered.
d. accounting profit minus economic profit.
e. economic profit minus accounting profit.
ANSWER: c
FEEDBACK: a. Incorrect. The accounting profit just sufficient to ensure that all resources used by
the firm earn their opportunity cost is called a normal profit. See 7-1: Cost and
Profit
b. Incorrect. The accounting profit just sufficient to ensure that all resources used by
Profit
c. Correct. The accounting profit just sufficient to ensure that all resources used by
Profit
d. Incorrect. The accounting profit just sufficient to ensure that all resources used by
Profit
e. Incorrect. The accounting profit just sufficient to ensure that all resources used by
Profit
POINTS: 1
DIFFICULTY: Easy
reflects
33. Suppose a soccer coach has been making $25,000 per year but gives up his coaching job in order to make soccer
shoes. If his revenue from the sale of these shoes is $50,000 and his materials cost $20,000, then his economic profit is
equal to _____.
a. $5,000
b. $25,000
c. $30,000
d. $50,000
e. $80,000
ANSWER: a
FEEDBACK: a. Correct. Economic profit equals total revenue minus all costs, both implicit and
POINTS: 1
reflects
34. Suppose Bob leaves his $50,000-a-year job as a financial advisor to P.E.T.S. and starts his own business selling pet-
care products. In the first year, his accounting profit is $70,000. Based on this level of success, Bob should:
a. return to his old job because his economic profit is negative.
b. return to his old job because his economic profit is smaller than his accounting profit.
c. return to his old job because his economic profit is less than his old salary.
d. stay with his new firm because his economic profit is positive.
e. stay with his new firm because accounting profit is positive.
ANSWER: d
FEEDBACK: a. Incorrect. A firm can continue producing as long as its economic profit is positive.
Economic profit can be calculated as accounting profit minus implicit costs. See
b. Incorrect. A firm can continue producing as long as its economic profit is positive.
c. Incorrect. A firm can continue producing as long as its economic profit is positive.
d. Correct. A firm can continue producing as long as its economic profit is positive.
e. Incorrect. A firm can continue producing as long as its economic profit is positive.
POINTS: 1
reflects
35. Suppose a lawyer leaves his $50,000-a-year job and starts his own firm breeding pit bulls. In the first year, his
accounting profit is $70,000. The lawyer finances his new business with $100,000 from his savings account, which had
earned 10 percent interest. From his new business, the lawyer earns an economic profit of _____.
a. $10,000
b. $60,000
c. $70,000
d. −$80,000
e. −$90,000
ANSWER: a
FEEDBACK: a. Correct. Economic profit equals total revenue minus all costs, both implicit and
explicit. Economic profit can also be calculated as accounting profit minus implicit
costs. See 7-1: Cost and Profit
POINTS: 1
reflects
36. If a pizza joint earns only a normal profit this year, its:

a. economic profit is equal to its accounting profit.
b. economic profit is zero.
c. economic profit is equal to the average accounting profit in other industries.
d. accounting profit is zero.
e. accounting profit is less than its economic profit.
ANSWER: b
FEEDBACK: a. Incorrect. Any accounting profit in excess of normal profit is economic profit. See
b. Correct. Any accounting profit in excess of normal profit is economic profit. See 7-
1: Cost and Profit
c. Incorrect. Any accounting profit in excess of normal profit is economic profit. See
d. Incorrect. Any accounting profit in excess of normal profit is economic profit. See
e. Incorrect. Any accounting profit in excess of normal profit is economic profit. See
POINTS: 1
reflects
37. If a shoe store earns more than a normal profit, its:

a. economic profit must be greater than its accounting profit.
b. economic profit is positive.
c. economic profit is, therefore, equal to its accounting profit.
d. accounting profit is zero.
e. accounting profit is less than its economic profit.
ANSWER: b
FEEDBACK: a. Incorrect. Any accounting profit in excess of normal profit is economic profit. See
b. Correct. Any accounting profit in excess of normal profit is economic profit. See 7-
1: Cost and Profit
c. Incorrect. Any accounting profit in excess of normal profit is economic profit. See
d. Incorrect. Any accounting profit in excess of normal profit is economic profit. See
e. Incorrect. Any accounting profit in excess of normal profit is economic profit. See
POINTS: 1
reflects
38. Suppose a professor gives up her teaching job to devote her time to writing textbooks. Soon after, salaries for
professors rise. As a result, _____.
a. her accounting profit will rise
b. her accounting profit will fall
c. her explicit costs will rise
d. her economic profit from textbooks will fall
e. her economic profit from textbooks will rise
ANSWER: d
FEEDBACK: a. Incorrect. Forgone wages are implicit costs; these are taken into account when
calculating economic profit. See 7-1: Cost and Profit
b. Incorrect. Forgone wages are implicit costs; these are taken into account when
c. Incorrect. Forgone wages are implicit costs; these are taken into account when
d. Correct. Forgone wages are implicit costs; these are taken into account when
e. Incorrect. Forgone wages are implicit costs; these are taken into account when
POINTS: 1
reflects
39. Suppose Joan uses her savings to purchase computer equipment for her new consulting business. Soon after this, the
market interest rate rises. As a result, her:
a. explicit costs rise immediately.
b. accounting profit falls immediately.
c. accounting profit rises immediately.
d. economic profit rises immediately.
e. economic profit falls immediately.
ANSWER: e
FEEDBACK: a. Incorrect. Forgone interest is an implicit cost; these are taken into account when
b. Incorrect. Forgone interest is an implicit cost; these are taken into account when
c. Incorrect. Forgone interest is an implicit cost; these are taken into account when
d. Incorrect. Forgone interest is an implicit cost; these are taken into account when
e. Correct. Forgone interest is an implicit cost; these are taken into account when
POINTS: 1
reflects
40. John moved his office from a building he was renting downtown to the carriage house he owns behind his house. How
will his profit change?
a. Implicit costs will fall.
b. Explicit costs will remain unchanged, while implicit costs will rise.
c. Economic profit will fall.
d. Explicit costs will rise.
e. Accounting profit will rise.
ANSWER: e
FEEDBACK: a. Incorrect. Rent is an explicit cost, whereas using the owner’s resource is an
implicit cost. Accounting profit takes into account only the explicit costs, whereas
economic profit takes into account explicit and implicit costs. See 7-1: Cost and
Profit
b. Incorrect. Rent is an explicit cost, whereas using the owner’s resource is an
Profit
c. Incorrect. Rent is an explicit cost, whereas using the owner’s resource is an
Profit
d. Incorrect. Rent is an explicit cost, whereas using the owner’s resource is an
Profit
e. Correct. Rent is an explicit cost, whereas using the owner’s resource is an implicit
cost. Accounting profit takes into account only the explicit costs, whereas
Profit
POINTS: 1
reflects
41. Table 7.1 shows revenue and cost information for Sally’s small business. Sally owns a small business that she operates
in a building she owns. Given the information in the table below, Sally's accounting profit is equal to _____.
Table 7.1
Total Revenue $100,000
Assistant’s salary $20,000

Material & equipment $15,000
Forgone salary $30,000
Forgone interest $1,000
Foregone building rental $10,000

a. $80,000
b. $50,000
c. $65,000
d. $35,000
e. $24,000
ANSWER: c
Cost and Profit
Cost and Profit
c. Correct. Accounting profit equals total revenue minus explicit costs. See 7-1: Cost
and Profit
d. Incorrect. Accounting profit equals total revenue minus explicit costs. See 7-1:
Cost and Profit
Cost and Profit
POINTS: 1
reflects
42. Table 7.1 shows revenue and cost information for Sally’s small business. Sally owns a small business that she operates
in a building she owns. Given the information in the table below, Sally's economic profit is equal to _____.
a. $80,000
b. $50,000
c. $65,000
d. $35,000
e. $24,000
ANSWER: e
POINTS: 1
reflects
$20,000 a year, and take over a storage building he owns and currently rents for $6,000 a year. His expenses at the sushi
bar would be $50,000 for food and $2,000 for gas and electricity. _____ is the minimum revenue he must earn per year in
order for it to be worth his while to open his sushi bar.
a. $26,000
b. $66,000
c. $78,000
d. $52,000
e. $72,000
ANSWER: c
FEEDBACK: a. Incorrect. To make opening the sushi bar worthwhile, the sushi bar has to cover
its explicit and implicit costs. See 7-1: Cost and Profit
b. Incorrect. To make opening the sushi bar worthwhile, the sushi bar has to cover
c. Correct. To make opening the sushi bar worthwhile, the sushi bar has to cover its
explicit and implicit costs. See 7-1: Cost and Profit
d. Incorrect. To make opening the sushi bar worthwhile, the sushi bar has to cover
e. Incorrect. To make opening the sushi bar worthwhile, the sushi bar has to cover
POINTS: 1
reflects
44. Inputs that can be increased or decreased in the short run are called _____.
a. fixed inputs
b. variable inputs
c. economic inputs
d. accounting inputs
e. normal inputs
ANSWER: b
FEEDBACK: a. Incorrect. Any resource that can be varied in the short run to increase or
decrease production is called a variable input. See 7-2: Production in the Short
Run
b. Correct. Any resource that can be varied in the short run to increase or decrease
production is called a variable input. See 7-2: Production in the Short Run
c. Incorrect. Any resource that can be varied in the short run to increase or
Run
d. Incorrect. Any resource that can be varied in the short run to increase or
Run
e. Incorrect. Any resource that can be varied in the short run to increase or
Run
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: MICR.MCEACH.17.07.02 - Describe the most important feature of production in the short
run and what causes it
TOPICS: Production in the Short Run
45. The short run is a period of time:

a. equal to or less than six months.
b. during which all resources may be varied.
c. during which all resources are fixed.
d. during which at least one resource is fixed.
e. during which at least one resource may be varied.
ANSWER: d
FEEDBACK: a. Incorrect. In the short run for a firm, at least one of the resources is fixed. See 7-
2: Production in the Short Run
b. Incorrect. In the short run for a firm, at least one of the resources is fixed. See 7-
c. Incorrect. In the short run for a firm, at least one of the resources is fixed. See 7-
d. Correct. In the short run for a firm, at least one of the resources is fixed. See 7-2:
Production in the Short Run
e. Incorrect. In the short run for a firm, at least one of the resources is fixed. See 7-
POINTS: 1
DIFFICULTY: Easy
46. Which of the following is most likely to be a fixed resource for a word processing firm?
a. A laptop
b. A worker
c. The building
d. A month’s electricity bill
e. A bundle of paper
ANSWER: c
FEEDBACK: a. Incorrect. Fixed resources cannot be varied in the short run. See 7-2: Production
in the Short Run
b. Incorrect. Fixed resources cannot be varied in the short run. See 7-2: Production
in the Short Run
c. Correct. Fixed resources cannot be varied in the short run. See 7-2: Production in
the Short Run
d. Incorrect. Fixed resources cannot be varied in the short run. See 7-2: Production
in the Short Run
e. Incorrect. Fixed resources cannot be varied in the short run. See 7-2: Production
in the Short Run
POINTS: 1
DIFFICULTY: Easy
47. Which of the following probably has the shortest long run?
a. A law firm
b. A steel mill
c. An automobile plant
d. A tire factory
e. An aircraft engine factory
ANSWER: a
FEEDBACK: a. Correct. All resources can be varied in the long run. In the long run, firms can
change their scale of operations. This can imply renting an additional office for the
law firm, building an additional factory for the steel mill, the automobile plant, tire
factory, and aircraft engine factory. See 7-2: Production in the Short Run
b. Incorrect. All resources can be varied in the long run. In the long run, firms can
c. Incorrect. All resources can be varied in the long run. In the long run, firms can
d. Incorrect. All resources can be varied in the long run. In the long run, firms can
e. Incorrect. All resources can be varied in the long run. In the long run, firms can
POINTS: 1
DIFFICULTY: Easy
48. Which of the following would most likely reach the long run most rapidly?
a. A nuclear power plant
b. A college
c. A lumber mill
d. A shopping mall
e. A hot dog stand
ANSWER: e
FEEDBACK: a. Incorrect. All resources can be varied in the long run. In the long run, firms can
change their scale of operations. See 7-2: Production in the Short Run
b. Incorrect. All resources can be varied in the long run. In the long run, firms can
c. Incorrect. All resources can be varied in the long run. In the long run, firms can
d. Incorrect. All resources can be varied in the long run. In the long run, firms can
e. Correct. All resources can be varied in the long run. In the long run, firms can
POINTS: 1
DIFFICULTY: Easy
49. The length of time that represents the long run:

a. is greater than one year.
b. is greater than six months.
c. is longer in service industries than in manufacturing.
d. is the same for all industries.
e. varies from industry to industry.
ANSWER: e
FEEDBACK: a. Incorrect. All resources can be varied in the long run. The length of the long run
differs from industry to industry because the nature of production differs. See 7-2:
b. Incorrect. All resources can be varied in the long run. The length of the long run
c. Incorrect. All resources can be varied in the long run. The length of the long run
d. Incorrect. All resources can be varied in the long run. The length of the long run
e. Correct. All resources can be varied in the long run. The length of the long run
POINTS: 1
DIFFICULTY: Easy
50. The short run is a period of time:

a. less than one year.
b. greater than one year.
c. during which all resources are variable.
d. during which at least one resource is fixed.
e. during which at least one resource is variable.
ANSWER: d
FEEDBACK: a. Incorrect. In the short run, at least one resource is fixed. See 7-2: Production in
the Short Run
b. Incorrect. In the short run, at least one resource is fixed. See 7-2: Production in
the Short Run
c. Incorrect. In the short run, at least one resource is fixed. See 7-2: Production in
the Short Run
d. Correct. In the short run, at least one resource is fixed. See 7-2: Production in the
Short Run
e. Incorrect. In the short run, at least one resource is fixed. See 7-2: Production in
the Short Run
POINTS: 1
DIFFICULTY: Easy
51. The additional output obtained by adding another unit of labor to the production process is called _____.
a. the marginal cost of labor
b. the average output of labor
c. a variable cost
d. the marginal product of labor
e. the marginal utility of labor
ANSWER: d
FEEDBACK: a. Incorrect. Marginal product is the change in total product when a particular
resource increases by one unit, all other resources constant. See 7-2: Production
in the Short Run
b. Incorrect. Marginal product is the change in total product when a particular
in the Short Run
c. Incorrect. Marginal product is the change in total product when a particular
in the Short Run
d. Correct. Marginal product is the change in total product when a particular
in the Short Run
e. Incorrect. Marginal product is the change in total product when a particular
in the Short Run
POINTS: 1
DIFFICULTY: Easy
52. Marginal product is defined as:

a. the increase in revenue that occurs when an additional unit of a resource is added.
b. the increase in output that occurs when all resources are increased by the same proportion.
c. the increase in output that occurs when an additional unit of a resource is added, holding all other resources
constant.
d. the amount of additional resources needed to increase output by one unit when all resources are increased by
the same amount.
e. the amount of additional money needed to increase output by one unit when all resources are held constant.
ANSWER: c
in the Short Run
in the Short Run
c. Correct. Marginal product is the change in total product when a particular
in the Short Run
d. Incorrect. Marginal product is the change in total product when a particular
in the Short Run
in the Short Run
POINTS: 1
DIFFICULTY: Easy
53. Table 7.2 shows labor and the quantity of shoes produced by a firm. Given the information in the table below, _____
is the marginal product of the third unit of labor.
Table 7.2

Total product
Labor (pairs of shoes)
0 0
1 20
2 50
3 75
4 80
5 75
a. 45 pairs of shoes
b. 25 pairs of shoes
c. 15 pairs of shoes
d. 75 pairs of shoes
e. 50 pairs of shoes
ANSWER: b
in the Short Run
b. Correct. Marginal product is the change in total product when a particular
in the Short Run
in the Short Run
in the Short Run
in the Short Run
POINTS: 1
is the average product of the third unit of labor.
Table 7.2
Total product
0 0
1 20
2 50
3 75
4 80
5 75
a. 45 pairs of shoes
ANSWER: b
FEEDBACK: a. Incorrect. Average product of a given unit of a resource is the total product
divided by the number of units of the resource. See 7-2: Production in the Short
Run
b. Correct. Average product of a given unit of a resource is the total product divided
by the number of units of the resource. See 7-2: Production in the Short Run
c. Incorrect. Average product of a given unit of a resource is the total product
Run
d. Incorrect. Average product of a given unit of a resource is the total product
Run
e. Incorrect. Average product of a given unit of a resource is the total product
Run
POINTS: 1
is the marginal product of the fourth unit of labor.
Table 7.2
Total product
0 0
1 20
2 50
3 75
4 80
5 75
a. 5 pairs of shoes
ANSWER: a
FEEDBACK: a. Correct. Marginal product is the change in total product when a particular
in the Short Run
in the Short Run
in the Short Run
in the Short Run
in the Short Run
POINTS: 1
is the average product of the fourth unit of labor?
Table 7.2
Total product
0 0
1 20
2 50
3 75
4 80
5 75
a. 5 pairs of shoes
ANSWER: c
FEEDBACK: a. Incorrect. Average product of a given unit of a resource is the total product
Run
b. Incorrect. Average product of a given unit of a resource is the total product
Run
c. Correct. Average product of a given unit of a resource is the total product divided
by the number of units of the resource. See 7-2: Production in the Short Run
d. Incorrect. Average product of a given unit of a resource is the total product
Run
e. Incorrect. Average product of a given unit of a resource is the total product
Run

POINTS: 1
57. Table 7.2 shows labor and the quantity of shoes produced by a firm. Given the information in the table below, at
which point do diminishing marginal returns set in?
Table 7.2
Total product
0 0
1 20
2 50
3 75
4 80
5 75
a. Before the first unit of labor

b. Between the first and second units of labor
c. Between the second and third units of labor
d. Between the third and fourth units of labor
e. Between the fourth and fifth units of labor
ANSWER: c
FEEDBACK: a. Incorrect. The law of diminishing marginal returns states that as more of a
variable resource is combined with a given amount of other resources, marginal
product eventually declines. See 7-2: Production in the Short Run
b. Incorrect. The law of diminishing marginal returns states that as more of a
c. Correct. The law of diminishing marginal returns states that as more of a variable
resource is combined with a given amount of other resources, marginal product
eventually declines. See 7-2: Production in the Short Run
d. Incorrect. The law of diminishing marginal returns states that as more of a
e. Incorrect. The law of diminishing marginal returns states that as more of a
POINTS: 1

58. Table 7.2 shows labor and the quantity of shoes produced by a firm. Given the information in the table below, at
which of the following points do negative marginal returns set in?
Table 7.2
Total product
0 0
1 20
2 50
3 75
4 80
5 75
a. Before the first unit of labor

b. Between the first and second units of labor
c. Between the second and third units of labor
d. Between the third and fourth units of labor
e. Between the fourth and fifth units of labor
ANSWER: e
FEEDBACK: a. Incorrect. The firm exhibits negative marginal returns when the marginal product
is negative. See 7-2: Production in the Short Run
b. Incorrect. The firm exhibits negative marginal returns when the marginal product
c. Incorrect. The firm exhibits negative marginal returns when the marginal product
d. Incorrect. The firm exhibits negative marginal returns when the marginal product
e. Correct. The firm exhibits negative marginal returns when the marginal product is
negative. See 7-2: Production in the Short Run
POINTS: 1
59. Increasing marginal returns are generally the result of _____.

a. diseconomies of scale
b. increasing costs
c. the specialization and division of labor
d. labor unions
e. change in technology
ANSWER: c
FEEDBACK: a. Incorrect. Increasing marginal returns are present when marginal product is
positive and increasing; they are the result of the specialization and division of
labor. See 7-2: Production in the Short Run
b. Incorrect. Increasing marginal returns are present when marginal product is

c. Correct. Increasing marginal returns are present when marginal product is
d. Incorrect. Increasing marginal returns are present when marginal product is
e. Incorrect. Increasing marginal returns are present when marginal product is
POINTS: 1
DIFFICULTY: Easy
60. If a firm is experiencing diminishing marginal returns to labor, then which of the following statements is true?
a. The first workers the firm hired were better than the workers hired later on.
b. The firm is experiencing decreasing returns to scale.
c. The positive effect of specialization in production is being offset by the negative effect of crowding of inputs.
d. Output is decreasing with increasing inputs.
e. The firm should buy more non-labor inputs.
ANSWER: c
FEEDBACK: a. Incorrect. After a certain level of output, the positive effect of specialization in
production is offset by the negative effect of crowding of inputs. See 7-2:
b. Incorrect. After a certain level of output, the positive effect of specialization in
c. Correct. After a certain level of output, the positive effect of specialization in
d. Incorrect. After a certain level of output, the positive effect of specialization in
e. Incorrect. After a certain level of output, the positive effect of specialization in
POINTS: 1
DIFFICULTY: Easy
61. Table 7.3 shows the number of workers and total output produced in a firm. In the table below, the total product of
four workers is _____.
Table 7.3
Number Total
of workers output
0 0
1 10
2 40
3 100
4 140
5 160
6 170
7 150
a. 0
b. 10
c. 20
d. 140/4
e. 140
ANSWER: e
FEEDBACK: a. Incorrect. A firm’s total output is equal to its total product. See 7-2: Production in
the Short Run
b. Incorrect. A firm’s total output is equal to its total product. See 7-2: Production in
the Short Run
c. Incorrect. A firm’s total output is equal to its total product. See 7-2: Production in
the Short Run
d. Incorrect. A firm’s total output is equal to its total product. See 7-2: Production in
the Short Run
e. Correct. A firm’s total output is equal to its total product. See 7-2: Production in
the Short Run
POINTS: 1
DIFFICULTY: Easy
62. Table 7.3 shows the number of workers and total output produced in a firm. In the table below, the marginal product
of the third worker is _____.
Table 7.3
Number Total
of workers output
0 0
1 10
2 40
3 100
4 140
5 160
6 170
7 150

a. 20
b. 100/3
c. 60
d. 50
e. 140
ANSWER: c
in the Short Run
in the Short Run
c. Correct. Marginal product is the change in total product when a particular
in the Short Run
in the Short Run
in the Short Run
POINTS: 1
63. Table 7.3 shows the number of workers and total output produced in a firm. In the table below, diminishing marginal
returns set in with the addition of the _____.
Table 7.3
Number Total
of workers output
0 0
1 10
2 40
3 100
4 140
5 160
6 170
7 150
a. first worker
b. third worker
c. fourth worker
d. fifth worker
e. seventh worker
ANSWER: c

POINTS: 1
64. The law of diminishing marginal returns states that:

a. long-run average cost declines as output increases.
b. if the marginal product is above the average product, the average will rise.
c. as units of a variable input are added to a given amount of fixed inputs, the marginal product of the variable
input eventually diminishes.
d. as a person consumes more of a good, the marginal satisfaction from that good eventually diminishes.
e. if marginal product is positive, total product rises.
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
65. Table 7.4 shows labor, total product, and marginal product for a firm. In the table below, marginal returns increase
with the hiring of up to _____ workers.
Table 7.4
Units of Total Marginal
Labor product product
0 0 -
1 6 6
2 14 8
3 24 10
4 36 12
5 42 6
6 46 4
a. six
b. two
c. five
d. four
e. three
ANSWER: d
FEEDBACK: a. Incorrect. A firm exhibits increasing marginal returns as long as the marginal
product is positive and increasing. See 7-2: Production in the Short Run
b. Incorrect. A firm exhibits increasing marginal returns as long as the marginal
c. Incorrect. A firm exhibits increasing marginal returns as long as the marginal
d. Correct. A firm exhibits increasing marginal returns as long as the marginal
e. Incorrect. A firm exhibits increasing marginal returns as long as the marginal
POINTS: 1
66. Table 7.4 shows labor, total product, and marginal product for a firm. In the table below, marginal returns begin to
diminish with the hiring of the _____ worker.
Table 7.4
Units of Total Marginal
Labor product product
0 0 -
1 6 6
2 14 8
3 24 10
4 36 12
5 42 6
6 46 4
a. second
b. third
c. fourth
d. fifth
e. sixth
ANSWER: d
c. Incorrect. The law of diminishing marginal returns states that as more of a
d. Correct. The law of diminishing marginal returns states that as more of a variable
POINTS: 1
67. When diminishing marginal returns set in, total product _____.
a. is negative
b. decreases at an increasing rate
c. decreases at a decreasing rate
d. increases at an increasing rate
e. increases at a decreasing rate
ANSWER: e
FEEDBACK: a. Incorrect. When diminishing marginal returns set in, marginal product is positive
and increasing and total product increases at a decreasing rate. See 7-2:
b. Incorrect. When diminishing marginal returns set in, marginal product is positive
c. Incorrect. When diminishing marginal returns set in, marginal product is positive
d. Incorrect. When diminishing marginal returns set in, marginal product is positive
e. Correct. When diminishing marginal returns set in, marginal product is positive
POINTS: 1
68. When diminishing marginal returns set in, marginal product is _____.
a. positive and increasing
b. positive and decreasing
c. negative and increasing
d. negative and decreasing
e. zero
ANSWER: b
FEEDBACK: a. Incorrect. When diminishing marginal returns set in, marginal product is positive
and decreasing and total product is increasing at a diminishing rate. See 7-2:
b. Correct. When diminishing marginal returns set in, marginal product is positive
c. Incorrect. When diminishing marginal returns set in, marginal product is positive
d. Incorrect. When diminishing marginal returns set in, marginal product is positive
e. Incorrect. When diminishing marginal returns set in, marginal product is positive
POINTS: 1
69. In the range of increasing marginal returns, total product is _____.

a. increasing at a constant rate
b. increasing at an increasing rate
c. increasing at a decreasing rate
d. decreasing at an increasing rate
e. decreasing at a decreasing rate
ANSWER: b
FEEDBACK: a. Incorrect. In the range of increasing marginal returns, marginal product is positive
and increasing and total product is increasing at an increasing rate. See 7-2:
b. Correct. In the range of increasing marginal returns, marginal product is positive
c. Incorrect. In the range of increasing marginal returns, marginal product is positive
d. Incorrect. In the range of increasing marginal returns, marginal product is positive
e. Incorrect. In the range of increasing marginal returns, marginal product is positive
POINTS: 1
70. At the point where diminishing marginal returns set in, the slope of the total product curve is _____.
a. positive and increasing
b. positive and decreasing
c. negative and increasing
d. negative and decreasing
e. constant
ANSWER: b
FEEDBACK: a. Incorrect. At the point where diminishing marginal returns set in, marginal product
is positive and decreasing, total product is increasing at a diminishing rate, and
the slope of the total product curve is positive and decreasing. See 7-2:
b. Correct. At the point where diminishing marginal returns set in, marginal product
c. Incorrect. At the point where diminishing marginal returns set in, marginal product
d. Incorrect. At the point where diminishing marginal returns set in, marginal product
e. Incorrect. At the point where diminishing marginal returns set in, marginal product
POINTS: 1
71. Which of the following is true of marginal product?

a. When marginal product is negative, total product is increasing.
b. When marginal product is increasing, total product is decreasing.
c. When marginal product is positive and decreasing, total product is decreasing.
d. When marginal product is positive and decreasing, total product is increasing by increasing amounts.
e. When marginal product is increasing, total product is increasing by increasing amounts.
ANSWER: e
FEEDBACK: a. Incorrect. Marginal product is the change in total product due to a unit change in a
variable resource, other things constant. See 7-2: Production in the Short Run
b. Incorrect. Marginal product is the change in total product due to a unit change in a
c. Incorrect. Marginal product is the change in total product due to a unit change in a
d. Incorrect. Marginal product is the change in total product due to a unit change in a
e. Correct. Marginal product is the change in total product due to a unit change in a
POINTS: 1
72. The marginal product of labor is the _____.

a. cost of one worker
b. average output per worker
c. change in revenue from selling one more unit of output
d. change in revenue from using one more unit of labor
e. change in output from using one more unit of labor
ANSWER: e
in the Short Run
in the Short Run
in the Short Run
in the Short Run
e. Correct. Marginal product is the change in total product when a particular
in the Short Run
POINTS: 1
DIFFICULTY: Easy
73. To a firm facing constant input prices, increasing marginal returns:

a. mean that each additional unit of output costs more to produce than the previous unit.
b. mean that the marginal product of the variable input decreases as more of the input is used.
c. can occur due to the specialization and division of labor.
d. usually occur at very high rates of output.
e. can never occur.
ANSWER: c
FEEDBACK: a. Incorrect. A firm exhibits increasing marginal returns when the marginal product is
positive and increasing. As more of the variable input is used, specialization and
division of labor can occur when the production exhibits increasing marginal
returns. See 7-2: Production in the Short Run
b. Incorrect. A firm exhibits increasing marginal returns when the marginal product is
c. Correct. A firm exhibits increasing marginal returns when the marginal product is
d. Incorrect. A firm exhibits increasing marginal returns when the marginal product is
e. Incorrect. A firm exhibits increasing marginal returns when the marginal product is
POINTS: 1
DIFFICULTY: Easy
74. A variable cost is one that changes _____.

a. only in the long run

b. only in the short run
c. year to year
d. month to month
e. as output changes
ANSWER: e
FEEDBACK: a. Incorrect. A variable cost is the cost of a variable resource; it changes with
changes in output. See 7-3: Costs in the Short Run
b. Incorrect. A variable cost is the cost of a variable resource; it changes with
c. Incorrect. A variable cost is the cost of a variable resource; it changes with
d. Incorrect. A variable cost is the cost of a variable resource; it changes with
e. Correct. A variable cost is the cost of a variable resource; it changes with
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: MICR.MCEACH.17.07.03 - Explain why average cost is at a minimum when marginal cost
equals average cost
TOPICS: Costs in the Short Run
75. Fixed costs are defined as:

a. the total costs of a firm's production.
b. the additional costs of the last unit produced.
c. costs that increase proportionately as the quantity produced increases.
d. costs that do not vary as quantity produced increases.
e. implicit costs only.
ANSWER: d
FEEDBACK: a. Incorrect. A fixed cost is the cost of a fixed resource; it doesn’t change with
changes in output, and it must be paid even when production is zero. See 7-3:
Costs in the Short Run
b. Incorrect. A fixed cost is the cost of a fixed resource; it doesn’t change with
c. Incorrect. A fixed cost is the cost of a fixed resource; it doesn’t change with
d. Correct. A fixed cost is the cost of a fixed resource; it doesn’t change with
e. Incorrect. A fixed cost is the cost of a fixed resource; it doesn’t change with
POINTS: 1
DIFFICULTY: Easy
equals average cost

76. Marginal cost eventually increases as output increases due to the effect of _____.
a. economies of scale
b. increasing average cost
c. increasing total cost
d. diminishing marginal product of inputs
e. constant fixed cost
ANSWER: d
FEEDBACK: a. Incorrect. Changes in marginal cost reflect changes in the marginal productivity of
a variable resource; increasing marginal product decreases marginal cost, while
diminishing marginal product increases marginal cost. See 7-3: Costs in the Short
Run
b. Incorrect. Changes in marginal cost reflect changes in the marginal productivity of
Run
c. Incorrect. Changes in marginal cost reflect changes in the marginal productivity of
Run
d. Correct. Changes in marginal cost reflect changes in the marginal productivity of
Run
e. Incorrect. Changes in marginal cost reflect changes in the marginal productivity of
Run
POINTS: 1
DIFFICULTY: Easy
equals average cost
77. The law of diminishing marginal returns explains why:

a. monopolies have a guaranteed profit margin.
b. short-run MC and AVC curves are U-shaped.
c. the production possibilities curve is bowed out.
d. long-run supply curves are downward sloping.
e. total product is a straight line.
ANSWER: b
FEEDBACK: a. Incorrect. The law of diminishing marginal returns determines the shape of the
short run cost curves. See 7-3: Costs in the Short Run
b. Correct. The law of diminishing marginal returns determines the shape of the
c. Incorrect. The law of diminishing marginal returns determines the shape of the
d. Incorrect. The law of diminishing marginal returns determines the shape of the
e. Incorrect. The law of diminishing marginal returns determines the shape of the
POINTS: 1
equals average cost
78. Which of the following is true of marginal cost when marginal returns are increasing?
a. It is negative and increasing.
b. It is negative and decreasing.
c. It is positive and increasing.
d. It is positive and decreasing.
e. It is positive and has a constant slope.
ANSWER: d
a variable resource: increasing marginal product decreases marginal cost, while
Run
Run
Run
Run
Run
POINTS: 1
DIFFICULTY: Easy
equals average cost
79. What is true of marginal cost when marginal returns are decreasing?

a. It is negative and increasing.
b. It is negative and decreasing.
c. It is positive and increasing.
d. It is positive and decreasing.
e. It is positive and has a constant slope.
ANSWER: c
Run
Run
c. Correct. Changes in marginal cost reflect changes in the marginal productivity of
Run
d. Incorrect. Changes in marginal cost reflect changes in the marginal productivity of
Run
Run</p>
POINTS: 1
DIFFICULTY: Easy
equals average cost
80. Which of the following is true of the relationship between marginal cost and marginal product?
a. Marginal product and marginal cost are not related with each other.
b. When marginal product increases, marginal cost increases.
c. When marginal product increases, marginal cost falls.
d. When marginal product is negative, marginal cost is negative.
e. When diminishing marginal returns set in, marginal cost falls.
ANSWER: c
Run
Run
c. Correct. Changes in marginal cost reflect changes in the marginal productivity of
Run
Run
Run
POINTS: 1
DIFFICULTY: Easy
equals average cost
81. When a firm is experiencing diminishing marginal returns, its marginal cost _____.
a. rises
b. falls
c. remains constant
d. first rises and then falls
e. becomes zero
ANSWER: a
FEEDBACK: a. Correct. Changes in marginal cost reflect changes in the marginal productivity of
Run
Run
Run
Run
Run
POINTS: 1
DIFFICULTY: Easy
equals average cost
82. As output rises, marginal product eventually diminishes and _____.

a. marginal cost increases
b. average cost falls
c. total cost falls
d. fixed cost is increasing
e. average product is negative
ANSWER: a
FEEDBACK: a. Correct. Changes in marginal cost reflect changes in the marginal productivity of
Run
Run
Run
Run
Run
POINTS: 1
DIFFICULTY: Easy
equals average cost
83. If variable cost at each output level doubles, then:

a. Average Total Cost doubles.
b. Average Fixed Cost doubles.
c. Marginal Cost remains unchanged.
d. Marginal Cost doubles.
e. Marginal Cost less than doubles.
ANSWER: d
FEEDBACK: a. Incorrect. Variable cost is directly proportional to marginal cost. See 7-3: Costs in
the Short Run
b. Incorrect. Variable cost is directly proportional to marginal cost. See 7-3: Costs in
the Short Run
c. Incorrect. Variable cost is directly proportional to marginal cost. See 7-3: Costs in
the Short Run

d. Correct. Variable cost is directly proportional to marginal cost. See 7-3: Costs in
the Short Run
e. Incorrect. Variable cost is directly proportional to marginal cost. See 7-3: Costs in
the Short Run
POINTS: 1
DIFFICULTY: Easy
equals average cost
84. If variable cost rises from $60 to $100 as output increases from 15 to 20 units, the marginal cost of the twentieth unit
is _____.
a. $100
b. $5
c. $40
d. $8
e. $58
ANSWER: d
FEEDBACK: a. Incorrect. The marginal cost of producing one more unit is calculated as the
change in total cost divided by the change in output. See 7-3: Costs in the Short
Run
b. Incorrect. The marginal cost of producing one more unit is calculated as the
Run
c. Incorrect. The marginal cost of producing one more unit is calculated as the
Run
d. Correct. The marginal cost of producing one more unit is calculated as the
Run
e. Incorrect. The marginal cost of producing one more unit is calculated as the
Run
POINTS: 1
equals average cost
85. Which of the following statements is true?

a. If the marginal product of labor diminishes, the average fixed cost rises.
b. If the marginal product of labor diminishes, the average variable cost is constant.
c. If the marginal product of labor diminishes, the marginal cost rises.
d. If the marginal product of labor diminishes, the average total cost rises.
e. If the marginal product of labor diminishes, the total cost rises at a diminishing rate.
ANSWER: e
FEEDBACK: a. Incorrect. If the marginal product of a resource diminishes, its marginal cost rises
and the total cost increases at a diminishing rate. See 7-3: Costs in the Short Run
b. Incorrect. If the marginal product of a resource diminishes, its marginal cost rises
c. Incorrect. If the marginal product of a resource diminishes, its marginal cost rises
d. Incorrect. If the marginal product of a resource diminishes, its marginal cost rises
e. Correct. If the marginal product of a resource diminishes, its marginal cost rises
POINTS: 1
equals average cost
86. If labor is a firm's only variable input, marginal cost ultimately depends on:
a. the fixed cost of labor.
b. how much profit is made.
c. the price of the good produced.
d. how much output each worker produces.
e. the fixed cost per unit.
ANSWER: d
the variable resource. See 7-3: Costs in the Short Run
POINTS: 1
equals average cost
87. Total fixed cost divided by the level of output yields the _____.
a. average variable cost per unit
b. average fixed cost per unit
c. marginal cost per unit

d. average total cost per unit
e. marginal productivity per unit of fixed resource
ANSWER: b
FEEDBACK: a. Incorrect. Average fixed cost is calculated by dividing total fixed cost by the level
of output. See 7-3: Costs in the Short Run
b. Correct. Average fixed cost is calculated by dividing total fixed cost by the level of
output. See 7-3: Costs in the Short Run
c. Incorrect. Average fixed cost is calculated by dividing total fixed cost by the level
d. Incorrect. Average fixed cost is calculated by dividing total fixed cost by the level
e. Incorrect. Average fixed cost is calculated by dividing total fixed cost by the level
POINTS: 1
DIFFICULTY: Easy
equals average cost
88. Total cost is calculated as _____.

a. average fixed cost plus average variable cost
b. fixed cost plus variable cost
c. the additional cost of the last unit produced
d. marginal cost plus variable cost
e. marginal cost plus fixed cost
ANSWER: b
FEEDBACK: a. Incorrect. Total cost is the sum of fixed cost and variable cost. See 7-3: Costs in
the Short Run
b. Correct. Total cost is the sum of fixed cost and variable cost. See 7-3: Costs in
the Short Run
c. Incorrect. Total cost is the sum of fixed cost and variable cost. See 7-3: Costs in
the Short Run
d. Incorrect. Total cost is the sum of fixed cost and variable cost. See 7-3: Costs in
the Short Run
e. Incorrect. Total cost is the sum of fixed cost and variable cost. See 7-3: Costs in
the Short Run
POINTS: 1
DIFFICULTY: Easy
equals average cost
89. Total cost is calculated as _____.

a. FC + MC

b. FC/MC
c. (VC + FC)/MC
d. VC + FC
e. VC + output
ANSWER: d
FEEDBACK: a. Incorrect. Total cost is the sum of fixed cost and variable cost. See 7-3: Costs in
the Short Run
b. Incorrect. Total cost is the sum of fixed cost and variable cost. See 7-3: Costs in
the Short Run
c. Incorrect. Total cost is the sum of fixed cost and variable cost. See 7-3: Costs in
the Short Run
d. Correct. Total cost is the sum of fixed cost and variable cost. See 7-3: Costs in
the Short Run
e. Incorrect. Total cost is the sum of fixed cost and variable cost. See 7-3: Costs in
the Short Run
POINTS: 1
DIFFICULTY: Easy
equals average cost
90. If a firm shuts down in the short run and produces no output, its total cost will be:
a. equal to zero.
b. equal to the variable cost.
c. equal to the fixed cost.
d. equal to only explicit costs.
e. equal to the sum of implicit and explicit costs.
ANSWER: c
FEEDBACK: a. Incorrect. If a firm shuts down in the short run, it still has to pay the cost of its
fixed resources, which are those costs that do not vary with output. See 7-3:
b. Incorrect. If a firm shuts down in the short run, it still has to pay the cost of its
c. Correct. If a firm shuts down in the short run, it still has to pay the cost of its fixed
resources, which are those costs that do not vary with output. See 7-3: Costs in
the Short Run
d. Incorrect. If a firm shuts down in the short run, it still has to pay the cost of its
e. Incorrect. If a firm shuts down in the short run, it still has to pay the cost of its
POINTS: 1
DIFFICULTY: Easy
equals average cost

91. A firm enters into a consent decree to avoid an even greater legal setback. If the terms of the consent decree
effectively double the firm's fixed costs, then:
a. marginal cost more than doubles.
b. marginal cost doubles.
c. marginal cost remains unchanged.
d. average total cost remains unchanged.
e. average variable cost doubles.
ANSWER: c
FEEDBACK: a. Incorrect. Changes in the fixed costs of a firm do not have any effect on its
marginal costs. See 7-3: Costs in the Short Run
b. Incorrect. Changes in the fixed costs of a firm do not have any effect on its
c. Correct. Changes in the fixed costs of a firm do not have any effect on its
d. Incorrect. Changes in the fixed costs of a firm do not have any effect on its
e. Incorrect. Changes in the fixed costs of a firm do not have any effect on its
POINTS: 1
equals average cost
92. If total cost at Quantity = 0 is $100 and total cost at Quantity = 10 is $500, then average variable cost at Quantity = 10
is _____.
a. $500
b. $400
c. $50
d. $40
e. $10
ANSWER: d
FEEDBACK: a. Incorrect. The average variable cost is calculated as variable cost divided by
quantity. Total cost is the sum of fixed and variable costs. See 7-3: Costs in the
Short Run
b. Incorrect. The average variable cost is calculated as variable cost divided by
Short Run
c. Incorrect. The average variable cost is calculated as variable cost divided by
Short Run
d. Correct. The average variable cost is calculated as variable cost divided by

Short Run
e. Incorrect. The average variable cost is calculated as variable cost divided by
Short Run
POINTS: 1
DIFFICULTY: Easy
equals average cost
93. Figure 7.1 shows the U-shaped cost curves for a producer. In the figure below, A is the marginal cost curve, B is the
average variable cost curve, and C is the average total cost curve. The vertical distance between lines B and C at any level
of output represents _____.
a. marginal cost
b. average total cost
c. average variable cost
d. average fixed cost
e. average marginal cost
ANSWER: d
FEEDBACK: a. Incorrect. Average total cost is the sum of average fixed cost and average
variable cost. See 7-3: Costs in the Short
b. Incorrect. Average total cost is the sum of average fixed cost and average
c. Incorrect. Average total cost is the sum of average fixed cost and average
d. Correct. Average total cost is the sum of average fixed cost and average variable
cost. See 7-3: Costs in the Short
e. Incorrect. Average total cost is the sum of average fixed cost and average
POINTS: 1
equals average cost

94. Figure 7.1 shows the U-shaped cost curves for a producer. In the table figure, A is the marginal cost curve, B is the
average variable cost curve, and C is the average total cost curve. At an output of 10, the:
a. total cost equals $10.

b. fixed cost equals $1.
c. variable cost equals $10.
d. marginal cost equals $10.
e. fixed cost equals $10.
ANSWER: c
FEEDBACK: a. Incorrect. At an output of 10, we find the average total cost on the ATC curve at
point d and we find the marginal cost on the MC curve and the average variable
cost on the AVC curve at point e. See 7-3: Costs in the Short Run
b. Incorrect. At an output of 10, we find the average total cost on the ATC curve at
c. Correct. At an output of 10, we find the average total cost on the ATC curve at
d. Incorrect. At an output of 10, we find the average total cost on the ATC curve at
e. Incorrect. At an output of 10, we find the average total cost on the ATC curve at
POINTS: 1
equals average cost
95. Figure 7.1 shows the U-shaped cost curves for a producer. In the figure below, A is the marginal cost curve, B is the

average variable cost curve, and C is the average total cost curve. When output is 10, then:
a. total cost equals $80.

b. fixed cost equals $10.
c. variable cost equals $70.
d. marginal cost equals $10.
e. fixed cost equals $7.
ANSWER: a
FEEDBACK: a. Correct. At an output of 10, we find the average total cost on the ATC curve at
b. Incorrect. At an output of 10, we find the average total cost on the ATC curve at
c. Incorrect. At an output of 10, we find the average total cost on the ATC curve at
d. Incorrect. At an output of 10, we find the average total cost on the ATC curve at
e. Incorrect. At an output of 10, we find the average total cost on the ATC curve at
POINTS: 1
equals average cost
96. Figure 7.1 shows the U-shaped cost curves for a producer. In the figure below, curve B represents _____.

a. marginal cost
b. average total cost
c. average variable cost
d. average fixed cost
e. average marginal cost
ANSWER: c
FEEDBACK: a. Incorrect. A is the marginal cost curve, B is the average variable cost curve, and
C is the average total cost curve. See 7-3: Costs in the Short Run
b. Incorrect. A is the marginal cost curve, B is the average variable cost curve, and
c. Correct. A is the marginal cost curve, B is the average variable cost curve, and C
is the average total cost curve. See 7-3: Costs in the Short Run
d. Incorrect. A is the marginal cost curve, B is the average variable cost curve, and
e. Incorrect. A is the marginal cost curve, B is the average variable cost curve, and
POINTS: 1
equals average cost
97. The short-run average variable cost curve:

a. is always downward sloping.
b. starts at the origin and always slopes upward.
c. starts above the origin and always slopes upward.
d. is a horizontal line intersecting the vertical axis.
e. slopes downward at low rates of output and then slopes upward at higher rates of output.
ANSWER: e
FEEDBACK: a. Incorrect. The short-run average variable cost curve is U-shaped. See 7-3: Costs
in the Short Run
b. Incorrect. The short-run average variable cost curve is U-shaped. See 7-3: Costs
in the Short Run
c. Incorrect. The short-run average variable cost curve is U-shaped. See 7-3: Costs
in the Short Run
d. Incorrect. The short-run average variable cost curve is U-shaped. See 7-3: Costs
in the Short Run
e. Correct. The short-run average variable cost curve is U-shaped. See 7-3: Costs in
the Short Run
POINTS: 1
DIFFICULTY: Easy
equals average cost
98. The average total cost curve and the average variable cost curve:
a. are closer together as output increases, with average variable cost reaching its minimum level first.
b. are closer together as output increases, with average total cost reaching its minimum level first.
c. are farther apart as output increases, with average variable cost reaching its minimum level first.
d. are farther apart as output increases, with average total cost reaching its minimum level first.
e. are parallel to each other and reach their minimum levels at the same rate of output.
ANSWER: a
FEEDBACK: a. Correct. The difference between average total cost and average variable cost is
the average fixed cost. As more output is being produced, fixed cost stays the
same, but the average fixed cost declines. See 7-3: Costs in the Short Run
b. Incorrect. The difference between average total cost and average variable cost is
c. Incorrect. The difference between average total cost and average variable cost is
d. Incorrect. The difference between average total cost and average variable cost is
e. Incorrect. The difference between average total cost and average variable cost is
POINTS: 1
DIFFICULTY: Easy
equals average cost
99. Which of the following is true in the short run at the output level where average total cost is at its minimum?
a. Marginal cost equals average total cost.
b. Average variable cost equals fixed cost.
c. Marginal cost equals average variable cost.
d. Average total cost equals average fixed cost.
e. Average total cost equals average variable cost.
ANSWER: a
FEEDBACK: a. Correct. The marginal cost curve intersects the average total cost and average
variable cost curves at their respective minimum points. See 7-3: Costs in the
Short Run
b. Incorrect. The marginal cost curve intersects the average total cost and average
Short Run
c. Incorrect. The marginal cost curve intersects the average total cost and average
Short Run
d. Incorrect. The marginal cost curve intersects the average total cost and average
Short Run
e. Incorrect. The marginal cost curve intersects the average total cost and average
Short Run
POINTS: 1
DIFFICULTY: Easy
equals average cost
100. Which of the following correctly describes the relationship between the marginal cost and average variable cost
curves?
a. Marginal Cost is always above Average Variable Cost
b. Average Variable Cost is always above Marginal Cost
c. Marginal Cost crosses Average Variable Cost at Average Variable Cost's minimum point
d. Marginal Cost crosses Average Variable Cost at Marginal Cost's minimum point
e. both Average Variable Cost and Marginal Cost first rise and then fall
ANSWER: c
FEEDBACK: a. Incorrect. The marginal cost curve intersects the average total cost and average
Short Run
Short Run
c. Correct. The marginal cost curve intersects the average total cost and average
Short Run
Short Run
Short Run
POINTS: 1
DIFFICULTY: Easy
equals average cost
101. If marginal cost exceeds average variable cost, then:

a. average variable cost is negative.
b. average variable cost is increasing.
c. marginal cost is greater than average total cost.
d. average variable cost is decreasing.
e. average fixed cost is increasing.
ANSWER: b
FEEDBACK: a. Incorrect. When the marginal cost is below the average cost, the marginal cost
pulls the average cost down. When the marginal cost is above the average cost,
the marginal cost pulls the average cost up. See 7-3: Costs in the Short Run
b. Correct. When the marginal cost is below the average cost, the marginal cost
c. Incorrect. When the marginal cost is below the average cost, the marginal cost
d. Incorrect. When the marginal cost is below the average cost, the marginal cost
e. Incorrect. When the marginal cost is below the average cost, the marginal cost
POINTS: 1
DIFFICULTY: Easy
equals average cost
102. If marginal cost is less than average total cost, then:

a. marginal cost must be falling.
b. average total cost must be increasing.
c. average variable cost must equal average total cost.
d. average variable cost must be decreasing.
e. average variable cost may be increasing or decreasing.
ANSWER: e
FEEDBACK: a. Incorrect. When the marginal cost is below the average cost, the marginal cost
b. Incorrect. When the marginal cost is below the average cost, the marginal cost

e. Correct. When the marginal cost is below the average cost, the marginal cost
POINTS: 1
equals average cost
103. Which of the following is true of the MC curve?

a. It intersects the ATC curve at its minimum, but it does not intersect the AVC curve at its minimum.
b. It intersects the AVC curve at its minimum, but it does not intersect the ATC curve at its minimum.
c. It intersects both the ATC and the AVC curves at their minimums.
d. It intersects both the ATC and the AFC curves at their minimums.
e. It intersects both the AVC and the AFC curves at their minimums.
ANSWER: c
Short Run
Short Run
Short Run
Short Run
Short Run
POINTS: 1
DIFFICULTY: Easy
equals average cost
104. The marginal cost curve intersects the average total cost (ATC) curve:
a. at the ATC curve's minimum point.
b. only when the ATC curve is sloping upward.
c. at the ATC curve's maximum point.
d. only when the ATC curve is sloping downward.
e. when the ATC curve intersects the fixed cost curve.
ANSWER: a
FEEDBACK: a. Correct. The marginal cost curve intersects the average total cost and average
Short Run
Short Run
c. Incorrect. The marginal cost curve intersects the average total cost and average
Short Run
Short Run
Short Run
POINTS: 1
DIFFICULTY: Easy
equals average cost
105. The marginal cost curve intersects the average variable cost (AVC) curve:
a. only when the AVC curve is rising.
b. at the AVC curve's maximum point.
c. at the AVC curve's minimum point.
d. only when the AVC curve is sloping downward.
e. when the AVC curve intersects the fixed cost curve.
ANSWER: c
Short Run
Short Run
Short Run
Short Run
Short Run
POINTS: 1
DIFFICULTY: Easy
equals average cost
106. Which of the following is true of the relationship between average and marginal costs?
a. If the marginal cost is greater than the average cost, the average cost is increasing.
b. If the marginal cost is greater than the average cost, the average cost is decreasing
c. If the marginal cost is greater than the average cost, the marginal cost is increasing
d. If the marginal cost is greater than the average cost, the marginal cost is decreasing
e. If the marginal cost is greater than the average cost, the total cost is decreasing
ANSWER: a
FEEDBACK: a. Correct. When the marginal cost is below the average cost, the marginal cost
b. Incorrect. When the marginal cost is below the average cost, the marginal cost
e. Incorrect. When the marginal cost is below the average cost, the marginal cost
POINTS: 1
DIFFICULTY: Easy
equals average cost
107. With respect to the average cost curves, the marginal cost curve:
a. intersects the average total cost, average fixed cost, and average variable cost curves at their minimum points.
b. intersects the average total cost, average fixed cost, and average variable cost curves at their maximum points.
c. intersects both the average total cost and average variable cost curves at their minimum points.
d. intersects the average total cost curve where it is increasing and the average variable cost curve where it is
decreasing.
e. intersects only the average total cost curve at its minimum point.
ANSWER: c
Short Run
Short Run

Short Run
Short Run
Short Run
POINTS: 1
DIFFICULTY: Easy
equals average cost
108. A firm's long-run average cost curve is also called its _____.
a. profit curve
b. explicit cost curve
c. opportunity cost curve
d. production curve
e. planning curve
ANSWER: e
FEEDBACK: a. Incorrect. Because the long run is the planning horizon, the LRAC curve of a firm
is also called its planning curve. See 7-4: Costs in the Long Run
b. Incorrect. Because the long run is the planning horizon, the LRAC curve of a firm
c. Incorrect. Because the long run is the planning horizon, the LRAC curve of a firm
d. Incorrect. Because the long run is the planning horizon, the LRAC curve of a firm
e. Correct. Because the long run is the planning horizon, the LRAC curve of a firm is
also called its planning curve. See 7-4: Costs in the Long Run
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: MICR.MCEACH.17.07.04 - Explain the sources of economies of scale and diseconomies of
scale
109. Which of the following is also known as the firm's planning curve?
a. The average total cost curve
b. The total cost curve
c. The long-run average cost curve
d. The long-run marginal cost curve
e. The fixed cost curve
ANSWER: c
FEEDBACK: a. Incorrect. Because long run is the planning period, the LRAC curve of a firm is
b. Incorrect. Because long run is the planning period, the LRAC curve of a firm is
c. Correct. Because long run is the planning period, the LRAC curve of a firm is also
called its planning curve. See 7-4: Costs in the Long Run
d. Incorrect. Because long run is the planning period, the LRAC curve of a firm is
e. Incorrect. Because long run is the planning period, the LRAC curve of a firm is
POINTS: 1
DIFFICULTY: Easy
scale
110. For each size of plant a manufacturer could build, there is a different:
a. long-run average fixed cost curve.
b. long-run average variable cost curve.
c. short-run average total cost curve.
d. long-run average total cost curve.
e. long-run marginal cost curve.
ANSWER: c
FEEDBACK: a. Incorrect. The short-run average total cost curve is different for different sizes of
firms in an industry. See 7-4: Costs in the Long Run
b. Incorrect. The short-run average total cost curve is different for different sizes of
c. Correct. The short-run average total cost curve is different for different sizes of
d. Incorrect. The short-run average total cost curve is different for different sizes of
e. Incorrect. The short-run average total cost curve is different for different sizes of
POINTS: 1
DIFFICULTY: Easy
scale
111. Empirical studies of production suggest that the long-run average cost curve _____.
a. is U-shaped
b. has an inverted L shape
c. is L-shaped
d. is horizontal

e. shows diminishing marginal returns
ANSWER: a
FEEDBACK: a. Correct. The LRAC is a U-shaped curve because of economies and
diseconomies of scale. See 7-4: Costs in the Long Run
b. Incorrect. The LRAC is a U-shaped curve because of economies and
c. Incorrect. The LRAC is a U-shaped curve because of economies and
d. Incorrect. The LRAC is a U-shaped curve because of economies and
e. Incorrect. The LRAC is a U-shaped curve because of economies and
POINTS: 1
DIFFICULTY: Easy
scale
112. Figure 7.2 shows four short-run average cost curves for many possible plant sizes. If the firm represented in the
figure below wants to produce output level q, then, in the long run, it should build a plant size with average total cost
curve of _____.
a. 1
b. 2
c. 3
d. 4
e. either 1 or 3
ANSWER: b
FEEDBACK: a. Incorrect. The firm should choose the scale corresponding to the lowest short-run
average total cost. See 7-4: Costs in the Long
b. Correct. The firm should choose the scale corresponding to the lowest short-run
c. Incorrect. The firm should choose the scale corresponding to the lowest short-run
d. Incorrect. The firm should choose the scale corresponding to the lowest short-run
e. Incorrect. The firm should choose the scale corresponding to the lowest short-run
POINTS: 1
DIFFICULTY: Easy
scale
113. Figure 7.3 shows the short-run cost curves for a producer. In the figure below, lines H, J, and K represent:
a. marginal product, average product, and total product, respectively.

b. average fixed cost, average total cost, and average variable cost, respectively.
c. marginal cost, average total cost, and average variable cost, respectively.
d. average total cost, marginal cost, and average variable cost, respectively.
e. marginal cost, average product, average total cost, respectively.
ANSWER: c
FEEDBACK: a. Incorrect. ATC and AVC are U-shaped curves, with AVC positioned below ATC.
The MC curve intersects the ATV and AVC curves at their respective minimum
points. See 7-4: Costs in the Long Run
b. Incorrect. ATC and AVC are U-shaped curves, with AVC positioned below ATC.
c. Correct. ATC and AVC are U-shaped curves, with AVC positioned below ATC.
d. Incorrect. ATC and AVC are U-shaped curves, with AVC positioned below ATC.
e. Incorrect. ATC and AVC are U-shaped curves, with AVC positioned below ATC.
POINTS: 1
DIFFICULTY: Easy
scale

114. The shape of the long-run average cost curve reflects _____.
a. market demand
b. economies and diseconomies of scale
c. increasing and diminishing marginal returns
d. productivity of fixed inputs
e. the law of diminishing returns
ANSWER: b
FEEDBACK: a. Incorrect. The LRAC is a U-shaped curve because of economies and
b. Correct. The LRAC is a U-shaped curve because of economies and
c. Incorrect. The LRAC is a U-shaped curve because of economies and
d. Incorrect. The LRAC is a U-shaped curve because of economies and
e. Incorrect. The LRAC is a U-shaped curve because of economies and
POINTS: 1
DIFFICULTY: Easy
scale
115. Economies of scale occur where:

a. long-run average cost falls as new firms enter the industry.
b. short-run average cost falls as new firms enter the industry.
c. long-run average cost falls as one firm expands plant size.
d. short-run average cost falls as one firm expands plant size.
e. long-run average cost rises as one firm expands plant size.
ANSWER: c
FEEDBACK: a. Incorrect. Economies of scale occur where long-run average cost falls as output
expands. See 7-4: Costs in the Long Run
b. Incorrect. Economies of scale occur where long-run average cost falls as output
c. Correct. Economies of scale occur where long-run average cost falls as output
d. Incorrect. Economies of scale occur where long-run average cost falls as output
e. Incorrect. Economies of scale occur where long-run average cost falls as output
POINTS: 1
DIFFICULTY: Easy

scale
116. Which economic concept explains why a large drugstore chain can produce at a lower average cost than Whoville
Pharmacy, an individually owned drugstore?
a. Increasing marginal returns
b. Diminishing marginal returns
c. Economies of scale
d. Diseconomies of scale
e. Constant returns to scale
ANSWER: c
FEEDBACK: a. Incorrect. A larger plant size often allows for larger, more specialized machines
and greater specialization of labor. This will decrease the average cost as
production increases, allowing the larger drugstore chain to benefit from
economies of scale. See 7-4: Costs in the Long Run
b. Incorrect. A larger plant size often allows for larger, more specialized machines
c. Correct. A larger plant size often allows for larger, more specialized machines
d. Incorrect. A larger plant size often allows for larger, more specialized machines
e. Incorrect. A larger plant size often allows for larger, more specialized machines
POINTS: 1
scale
117. Doubling the circumference of an oil pipeline more than doubles the volume of oil that can be pumped through. This
strategy is chosen only by large firms because it results in _____.
a. production inefficiency
b. diminishing marginal returns
c. diseconomies of scale
d. constant returns to scale
e. economies of scale
ANSWER: e
FEEDBACK: a. Incorrect. Larger firms are more able to take advantages of the economies of
scale. See 7-4: Costs in the Long Run
b. Incorrect. Larger firms are more able to take advantages of the economies of
c. Incorrect. Larger firms are more able to take advantages of the economies of
d. Incorrect. Larger firms are more able to take advantages of the economies of
e. Correct. Larger firms are more able to take advantages of the economies of
POINTS: 1
scale
118. To achieve the minimum efficient scale in the long run, a firm must:
a. charge the highest price possible.
b. produce where demand is unit elastic.
c. sell the most output possible.
d. minimize the cost of producing any given amount of output.
e. produce at minimum long-run average cost.
ANSWER: e
FEEDBACK: a. Incorrect. The minimum efficient scale is the lowest rate of output at which long-
run average cost is at a minimum. See 7-4: Costs in the Long Run
b. Incorrect. The minimum efficient scale is the lowest rate of output at which long-
c. Incorrect. The minimum efficient scale is the lowest rate of output at which long-
d. Incorrect. The minimum efficient scale is the lowest rate of output at which long-
e. Correct. The minimum efficient scale is the lowest rate of output at which long-run
average cost is at a minimum. See 7-4: Costs in the Long Run
POINTS: 1
DIFFICULTY: Easy
scale
119. Economies of scale can be caused by:

a. a decrease in plant size.
b. short-run increases in marginal productivity.
c. the use of larger, more specialized machines.
d. higher information costs as a firm expands.

e. bureaucratic red tape as a firm expands.
ANSWER: c
FEEDBACK: a. Incorrect. Large-scale production and more specialization of resources lead to
b. Incorrect. Large-scale production and more specialization of resources lead to
c. Correct. Large-scale production and more specialization of resources lead to
d. Incorrect. Large-scale production and more specialization of resources lead to
e. Incorrect. Large-scale production and more specialization of resources lead to
POINTS: 1
DIFFICULTY: Easy
scale
120. The minimum efficient scale for a firm is the:

a. lowest rate of output at which long-run average cost is at a minimum.
b. lowest rate of output at which short-run average total cost is at a minimum.
c. lowest rate of output at which short-run average variable cost is at a minimum.
d. average of the rates of output at which long-run average cost is at a minimum.
e. average of the rates of output at which short-run average total cost is at a minimum.
ANSWER: a
FEEDBACK: a. Correct. The minimum efficient scale for a firm is the lowest rate of output at
which long-run average cost is at a minimum. See 7-4: Costs in the Long Run
b. Incorrect. The minimum efficient scale for a firm is the lowest rate of output at
c. Incorrect. The minimum efficient scale for a firm is the lowest rate of output at
d. Incorrect. The minimum efficient scale for a firm is the lowest rate of output at
e. Incorrect. The minimum efficient scale for a firm is the lowest rate of output at
POINTS: 1
DIFFICULTY: Easy
scale
121. Someone once said that Chevrolet is so large that if it shakes its tail, its takes two years for its head to notice it. This
is an example of _____.
a. profit centers
b. economies of scale
c. diseconomies of scale
d. diminishing marginal returns
e. diminishing marginal cost
ANSWER: c
FEEDBACK: a. Incorrect. Sometimes large firms tend to ignore a small part of their production
process, which ultimately leads to diseconomies of scale. See 7-4: Costs in the
Long Run
b. Incorrect. Sometimes large firms tend to ignore a small part of their production
Long Run
c. Correct. Sometimes large firms tend to ignore a small part of their production
Long Run
d. Incorrect. Sometimes large firms tend to ignore a small part of their production
Long Run
e. Incorrect. Sometimes large firms tend to ignore a small part of their production
Long Run
POINTS: 1
DIFFICULTY: Easy
scale
122. In recent years, the number of farms has fallen while the average farm size has increased. Which of the following
concept may explain this phenomenon?
a. Diminishing marginal returns
b. Declining productivity
c. Diseconomies of scale
d. Economies of scale
e. Poor economic reforms
ANSWER: d
FEEDBACK: a. Incorrect. A large plant size is preferred over small firms because of the
advantages of economies of scale. See 7-4: Costs in the Long Run
b. Incorrect. A large plant size is preferred over small firms because of the
c. Incorrect. A large plant size is preferred over small firms because of the
d. Correct. A large plant size is preferred over small firms because of the
e. Incorrect. A large plant size is preferred over small firms because of the
POINTS: 1
DIFFICULTY: Easy
scale
123. Which of the following reflects diseconomies of scale?

a. Marginal product decreasing as output increases
b. Short-run marginal cost increasing as output increases
c. Long-run marginal cost increasing as output increases.
d. Short-run average cost increasing as output increases.
e. Long-run total cost increasing by more than double as output doubles
ANSWER: e
FEEDBACK: a. Incorrect. Diseconomies of scale occur where long-run average cost increases as
output expands. See 7-4: Costs in the Long Run
b. Incorrect. Diseconomies of scale occur where long-run average cost increases as
c. Incorrect. Diseconomies of scale occur where long-run average cost increases as
d. Incorrect. Diseconomies of scale occur where long-run average cost increases as
e. Correct. Diseconomies of scale occur where long-run average cost increases as
POINTS: 1
scale
124. If General Electric finds that doubling both its plant size and the amount of associated inputs does not double its
output level, then:
a. the law of diminishing returns is in effect.
b. long-run average costs must be decreasing.
c. the firm is experiencing diseconomies of scale.
d. the firm should increase production.
e. the firm is experiencing constant returns to scale.
ANSWER: c
c. Correct. Diseconomies of scale occur where long-run average cost increases as
e. Incorrect. Diseconomies of scale occur where long-run average cost increases as
POINTS: 1

scale
125. As output increases, diseconomies of scale:

a. lead to rising long-run average costs.
b. lead to declining long-run average costs.
c. lead to rising short-run average total costs.
d. lead to declining short-run total cost.
e. mean the law of diminishing marginal returns is affecting production.
ANSWER: a
FEEDBACK: a. Correct. Diseconomies of scale occur where long-run average cost increases as
POINTS: 1
DIFFICULTY: Easy
scale
126. If a firm triples all of its inputs and its output doubles, it is said to be experiencing:
a. diminishing marginal returns.
b. increasing marginal returns.
c. diseconomies of scale.
d. economies of scale.
e. constant average costs.
ANSWER: c
c. Correct. Diseconomies of scale occur where long-run average cost increases as

POINTS: 1
scale
127. Diseconomies of scale are pictured on a graph by the upward-sloping portion of the _____.
a. marginal product curve
b. short-run marginal cost curve
c. long-run marginal cost curve
d. short-run average cost curve
e. long-run average cost curve
ANSWER: e
e. Correct. Diseconomies of scale occur where long-run average cost increases as
POINTS: 1
DIFFICULTY: Easy
scale
128. _____ is an example of an uncontrollable resource that contributes to diseconomies of scale for a movie theater.
a. A Concession stand staff
b. A public road congested with traffic
c. A discount from movie distributors
d. A single lobby in the theater
e. A bigger, more noticeable newspaper advertisement
ANSWER: b
FEEDBACK: a. Incorrect. An uncontrollable resource for a movie theater is a resource that cannot
be changed by the movie theater, not even in the long run. The inability to change
it leads to increasing long-run unit costs for the movie theater. See 7-4: Costs in
the Long Run
b. Correct. An uncontrollable resource for a movie theater is a resource that cannot
the Long Run

c. Incorrect. An uncontrollable resource for a movie theater is a resource that cannot
the Long Run
d. Incorrect. An uncontrollable resource for a movie theater is a resource that cannot
the Long Run
e. Incorrect. An uncontrollable resource for a movie theater is a resource that cannot
the Long Run
POINTS: 1
scale
129. Minimum efficient scale is the level of output at which:

a. short-run average total cost stops decreasing.
b. short-run average total cost stops increasing.
c. long-run average cost stops decreasing.
d. long-run average cost stops increasing.
e. profit stops increasing.
ANSWER: c
FEEDBACK: a. Incorrect. The minimum efficient scale is the lowest rate of output at which long-
b. Incorrect. The minimum efficient scale is the lowest rate of output at which long-
c. Correct. The minimum efficient scale is the lowest rate of output at which long-run
average cost is at a minimum. See 7-4: Costs in the Long Run
d. Incorrect. The minimum efficient scale is the lowest rate of output at which long-
e. Incorrect. The minimum efficient scale is the lowest rate of output at which long-
POINTS: 1
DIFFICULTY: Easy
scale
130. At a given rate of output, marginal cost equals the slope of the _____.
a. long-run average cost curve
b. short-run average total cost curve
c. planning curve

d. total cost curve
e. average variable cost curve
ANSWER: d
FEEDBACK: a. Incorrect. Marginal cost of producing one more unit is the change in total cost
when producing one more unit. See 7-4: Costs in the Long Run
b. Incorrect. Marginal cost of producing one more unit is the change in total cost
c. Incorrect. Marginal cost of producing one more unit is the change in total cost
d. Correct. Marginal cost of producing one more unit is the change in total cost when
producing one more unit. See 7-4: Costs in the Long Run
e. Incorrect. Marginal cost of producing one more unit is the change in total cost
POINTS: 1
scale
131. The least-cost way of producing each particular rate of output is represented by the tangency points between the
short-run average cost curves and the _____.
a. total cost curve
b. short-run average total cost curve
c. average variable cost curve
d. long-run average cost curve
e. marginal cost curve
ANSWER: d
FEEDBACK: a. Incorrect. The point of tangency between the short-run average cost curve and
the long-run average cost curve shows the least-cost way of producing a
particular rate of output. See 7-4: Costs in the Long Run
b. Incorrect. The point of tangency between the short-run average cost curve and
c. Incorrect. The point of tangency between the short-run average cost curve and
d. Correct. The point of tangency between the short-run average cost curve and the
long-run average cost curve shows the least-cost way of producing a particular
rate of output. See 7-4: Costs in the Long Run
e. Incorrect. The point of tangency between the short-run average cost curve and
POINTS: 1
DIFFICULTY: Easy
scale
132. Implicit costs involve direct cash payments for the use of a resource.
a. True
b. False
ANSWER: False
FEEDBACK: Correct Implicit costs are the opportunity costs of using resources owned by the firm or
provided by the firm’s owners. See 7-1: Cost and Profit
Incorrect Implicit costs are the opportunity costs of using resources owned by the firm or
POINTS: 1
DIFFICULTY: Easy
reflects
133. All other things constant, higher implicit costs result in lower accounting profit.
a. True
b. False
ANSWER: False
FEEDBACK: Correct Implicit costs require no cash payment and no entry in the firm’s accounting
statement, which records its revenues, explicit costs, and accounting profit. See 7-
1: Cost and Profit
Incorrect Implicit costs require no cash payment and no entry in the firm’s accounting
statement, which records its revenues, explicit costs, and accounting profit. See 7-
1: Cost and Profit
POINTS: 1
DIFFICULTY: Easy
reflects
134. If all the savings of an owner are invested in his consulting company, an increase in the interest rate increases his
implicit costs.
a. True
b. False
ANSWER: True
FEEDBACK: Correct Implicit costs are the opportunity costs of using resources owned by the firm or
Incorrect Implicit costs are the opportunity costs of using resources owned by the firm or
POINTS: 1
reflects
135. If a firm's accounting profit is positive, its economic profit must also be positive.
a. True
b. False
ANSWER: False
FEEDBACK: Correct Accounting profit equals total revenue minus explicit costs, while economic profit
equals total revenue minus all costs, both implicit and explicit. See 7-1: Cost and
Profit
Incorrect Accounting profit equals total revenue minus explicit costs, while economic profit
equals total revenue minus all costs, both implicit and explicit. See 7-1: Cost and
Profit
POINTS: 1
reflects
136. In the long run, all of a firm's inputs are variable.

a. True
b. False
ANSWER: True
FEEDBACK: Correct In the long run, none of a firm’s resources is fixed. See 7-2: Production in the Short
Run
Incorrect In the long run, none of a firm’s resources is fixed. See 7-2: Production in the Short
Run
POINTS: 1
DIFFICULTY: Easy
137. In the short run, all costs are fixed.

a. True
b. False
ANSWER: False
FEEDBACK: Correct In the short run, the cost of fixed resources is fixed and the cost of variable
resources changes with changes in output. See 7-2: Production in the Short Run
Incorrect In the short run, the cost of fixed resources is fixed and the cost of variable
resources changes with changes in output. See 7-2: Production in the Short Run
POINTS: 1
DIFFICULTY: Easy
138. If marginal product is negative, total product must be negative.

a. True
b. False
ANSWER: False
FEEDBACK: Correct Negative marginal product leads to a falling total product. See 7-2: Production in
the Short Run
Incorrect Negative marginal product leads to a falling total product. See 7-2: Production in
the Short Run
POINTS: 1
DIFFICULTY: Easy
139. If a firm is experiencing diminishing marginal returns, its marginal product is negative.
a. True
b. False
ANSWER: False
FEEDBACK: Correct If a firm exhibits diminishing marginal returns, its marginal product is positive and
declining. See 7-2: Production in the Short Run
Incorrect If a firm exhibits diminishing marginal returns, its marginal product is positive and
POINTS: 1
DIFFICULTY: Easy
140. If a firm is experiencing diminishing marginal returns, its marginal product is declining.
a. True
b. False
ANSWER: True
FEEDBACK: Correct If a firm exhibits diminishing marginal returns, its marginal product is positive and
Incorrect If a firm exhibits diminishing marginal returns, its marginal product is positive and

POINTS: 1
DIFFICULTY: Easy
141. When marginal product is negative, the slope of the total product curve must be negative.
a. True
b. False
ANSWER: True
FEEDBACK: Correct When marginal product is negative, total product declines. See 7-2: Production in
the Short Run
Incorrect When marginal product is negative, total product declines. See 7-2: Production in
the Short Run
POINTS: 1
142. If the marginal product of an input is negative, the total product must also be negative.
a. True
b. False
ANSWER: False
FEEDBACK: Correct If marginal product is negative, total product is declining. See 7-2: Production in the
Short Run
Incorrect If marginal product is negative, total product is declining. See 7-2: Production in the
Short Run
POINTS: 1
143. When marginal cost is decreasing, total cost is rising.

a. True
b. False
ANSWER: True
FEEDBACK: Correct Marginal cost is the additional cost incurred to produce one more unit of output.
See 7-3: Costs in the Short Run
Incorrect Marginal cost is the additional cost incurred to produce one more unit of output.

See 7-3: Costs in the Short Run
POINTS: 1
DIFFICULTY: Easy
equals average cost
144. The short-run average fixed cost curve is a horizontal line.

a. True
b. False
ANSWER: False
FEEDBACK: Correct The average fixed cost is declining as more output is produced. See 7-3: Costs in
the Short Run
Incorrect The average fixed cost is declining as more output is produced. See 7-3: Costs in
the Short Run
POINTS: 1
DIFFICULTY: Easy
equals average cost
145. The marginal cost curve intersects the minimum point of the average variable cost curve.
a. True
b. False
ANSWER: True
FEEDBACK: Correct The marginal cost curve intersects the average total cost and average variable cost
curves at their respective minimum points. See 7-3: Costs in the Short Run
Incorrect The marginal cost curve intersects the average total cost and average variable cost
curves at their respective minimum points. See 7-3: Costs in the Short Run
POINTS: 1
DIFFICULTY: Easy
equals average cost
146. Long-run average costs are the same as long-run total costs.
a. True
b. False
ANSWER: False
FEEDBACK: Correct Long-run average cost is the long-run total cost divided by quantity. See 7-4: Costs
in the Long Run

Incorrect Long-run average cost is the long-run total cost divided by quantity. See 7-4: Costs
in the Long Run
POINTS: 1
DIFFICULTY: Easy
scale
147. The long-run average cost curve is tangent to the minimum point of every short-run average total cost curve.
a. True
b. False
ANSWER: False
FEEDBACK: Correct Each of the short-run average cost curves is tangent to the long-run average cost
curve. See 7-4: Costs in the Long Run
Incorrect Each of the short-run average cost curves is tangent to the long-run average cost
curve. See 7-4: Costs in the Long Run
POINTS: 1
DIFFICULTY: Easy
scale
148. If a firm is producing at its minimum efficient scale, increasing its output slightly will always lead to diseconomies
of scale.
a. True
b. False
ANSWER: False
FEEDBACK: Correct The minimum efficient scale is the lowest rate of output at which long-run average
cost is at a minimum. Increasing output can lead to constant returns to scale or
Incorrect The minimum efficient scale is the lowest rate of output at which long-run average
cost is at a minimum. Increasing output can lead to constant returns to scale or
POINTS: 1
DIFFICULTY: Easy
scale
149. If a firm experiencing "economies of scale" decreases its output, its long-run average cost will decrease.
a. True
b. False
ANSWER: False
FEEDBACK: Correct Economies of scale occur where long-run average cost declines as output
Incorrect Economies of scale occur where long-run average cost declines as output
POINTS: 1
DIFFICULTY: Easy
scale
150. If a firm is experiencing diseconomies of scale, its long-run total cost curve is upward sloping.
a. True
b. False
ANSWER: True
FEEDBACK: Correct Diseconomies of scale occur where long-run average cost increases as output
Incorrect Diseconomies of scale occur where long-run average cost increases as output
POINTS: 1
DIFFICULTY: Easy
scale
151. Marginal cost indicates how much total cost increases if one more unit is produced or how much total cost drops if
production declines by one unit.
a. True
b. False
ANSWER: True
FEEDBACK: Correct Marginal cost is calculated as the change in total cost divided by the change in
output. See 7-4: Costs in the Long Run
Incorrect Marginal cost is calculated as the change in total cost divided by the change in
output. See 7-4: Costs in the Long Run
POINTS: 1
DIFFICULTY: Easy
scale

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and whence his instructions might quickly go forth to all. His inspired
counsels, and his wonder-working prayers, might be sought for all
who needed them, and his apostolic ordinances might be heard and
obeyed, almost at once, by the most distant churches. But the
circumstance, which more especially might lead the wanderer from
the ruined city and homes of his fathers, to Ephesus, was the great
gathering of Jews at this spot, who of course thus presented to the
Jewish apostle an ample field for exertions, for which his natural and
acquired endowments best fitted him.
In the account given in the Acts of the Apostles of Paul’s visit to

Ephesus, particular mention is made of a synagogue there, in which
he preached and disputed daily, for a long period, with great effect.
Yet Paul’s labors had by no means attained such complete success
among the Jews there, as to make it unnecessary for another
apostle to labor in the ministry of the circumcision, in that same
place; for it is especially mentioned that Paul, after three months’
active exertion in setting forth the truth in the synagogues, was
induced by the consideration of the peculiar difficulties which beset
him, among these proud and stubborn adherents of the old Mosaic
system, to withdraw himself from among them; and during the
remainder of his two years’ stay, he devoted himself, for the most
part, to the instruction of the willing Greeks, who opened the schools
of philosophy for his teachings, with far more willingness than the
Jews did their house of religious assembly. And it appears that the
greater part of his converts were rather among the Greeks than the
Jews; for in the great commotions that followed, the attack upon the
preachers of Christianity was made entirely by a heathen mob, in
which no Israelite seems to have had any hand whatever; so that
Paul had evidently made but little impression, comparatively, on the
latter class. Among the Jews then, there was still a wide field open
for the labors of one, consecrated, more especially, for the ministry
of the circumcision. The circumstances of the times, also, presented
many advantages for a successful assault upon the religious
prejudices of his countrymen. The great Center of Unity for the race
of Israel throughout the world, had now fallen into an irretrievable
oblivion, under the fire and sword of the invader. The glories of the
ancient covenant seemed to have passed away forever; and in the
high devotion of the Jew, a blank was now left, by the destruction of
the only temple of his ancient faith, which nothing else on earth could
fill. Henceforth he might be trained to look for a spiritual
temple,――a city eternal in the heavens, whose lasting foundations
were laid by no mortal hand, for the heathen to sweep away in
unholy triumph; but whose builder and maker was God. Thus
prepared, by the mournful consummation of their country’s utter ruin,
for the reception of a pure faith, the condition of the disconsolate
Jews must have appeared in the highest degree interesting to the
solitary surviving apostle of Jesus; and he would naturally devote the
remnant of his days to that portion of the world where he might make
the deepest impression on them, and where his influence might
spread widest to the scattered members of a people, then as now,
eminently commercial.
Under these peculiarly interesting circumstances, the Apostle

John is supposed to have arrived at Ephesus, where Timothy, still
holding the episcopal chair in which he had been placed by the
Apostle Paul, must have hailed with great delight the arrival of the
venerable John, from whose instructions and counsels, he might
hope to derive advantages so much the more welcome, since the
sword of the heathen persecution had removed his original apostolic
teacher from the world. John must have been, at the time of his
journey to Ephesus, considerably advanced in life. His precise age,
and the date of his arrival, are altogether unknown, nor are there any
fixed points on which the most critical and ingenious historical
investigation can base any certain conclusion whatever, as to these
interesting matters. Various and widely different have been the
conclusions on these points;――some fixing his journey to Ephesus
in the reign of Claudius, long before the destruction of Jerusalem,
and even before the council on the question of the circumcision. The
true character of this tale can be best appreciated by a reference to
another circumstance, which is gravely appended to it by its
narrators;――which is, that he was accompanied on this tour by the
Virgin Mary, and that she lived there with him for a long time. This
journey too, is thus made to precede the journey of Paul to Ephesus,
by many years, and yet no account whatever is given of the reasons
of the profound silence observed in the Acts of the Apostles, on an
event so important to the history of the propagation of the gospel,
nor why John could have lived so long at Ephesus, and yet have
effected so little, that when Paul came to the same place, the very
name of Christ was new there. But such stories are not worth
refuting, standing as they do, self-convicted falsehoods. Others
however, are more reasonable, and date this journey in the year of
the destruction of Jerusalem, supposing that Ephesus was the first
place of refuge to which the apostle went. But this conjecture is
totally destitute of all ancient authority, and is inconsistent with the
very reasonable supposition adopted above,――that he, in the flight
from Jerusalem, first journeyed eastward, following the general
current of the fugitives, towards the Euphrates. Where there is such
a total want of all data, any fixed decision is out of the question; but it
is very reasonable to suppose that John’s final departure from the
east did not take place till some years after this date; probably not
until the reign of Domitian. (A. D. 81 or 82.) He had lived in Babylon
therefore, till he had seen most of his brethren and friends pass
away from his eyes. The venerable Peter had sunk into the grave,
and had been followed by the rest of the apostolic band, until the
youngest apostle, now grown old, found himself standing alone in
the midst of a new generation, like one of the solitary columns of
desolate Babylon, among the low dwelling places of its refugee
inhabitants. But among the hourly crumbling heaps of that ruined
city, and the fast-darkening regions of that half-savage dominion,
there was each year less and less around him, on which his precious
labor could be advantageously expended. Christianity never seizes
readily on the energies of a broken or degenerating people, nor does
it flourish where the influences of civilization are losing their hold. Its
exalted and exalting genius rather takes the spirits that are already
on the wing for an upward course, and rises with them, giving new
energy to the ascending movement. It may exert its elevating
influence too, on the yet wild spirit of the uncivilized, and give, in the
new conceptions of a pure faith and a high destiny, the first impulse
to the advance of man towards refinement, in knowledge, and art,
and freedom; but its very existence among them is dependent on
this forward and upward movement,――and the beginning of its
mortal decay dates from the cessation of the developments of the
intellectual and physical resources of the race on which it operates.
Among the subjects of the Parthian empire, this downward
movement was already fully decided; and they were fast losing those
refinements of feeling and thought on which the new faith could best
fasten its spiritual and inspiring influences; they therefore soon
became but hopeless objects of missionary exertion, when
compared with the active and enterprising inhabitants of the still
improving regions of the west. “Westward” then, “the star” of
Christianity as “of empire, took its way;” and the last of the apostles
was but following, not leading, the march of his Lord’s advancing
dominion, when he shook off the dust of the darkening eastern lands
from his feet, forever; turning his aged face towards the setting sun,
to find in his latter days, a new home and a foreign grave among the
children of his brethren; and to rejoice his old eyes with the glorious
sight of what God had done for the churches, among the flourishing
cities of the west, that were still advancing under Grecian art and
Roman sway.
Ephesus.――On the importance of this place, as an apostolic station, the Magdeburg

Centuriators are eloquent; and such is the classic elegance of the Latin in which these
moderns have expressed themselves, that the passage is worth giving entire, for the sake
of those who can enjoy the beauty of the original. “Considera mirabile Dei consilium.
Joannes in Ephesum ad littus maris Aegei collocatus est: ut inde, quasi e specula, retro
suam Asiam videret, suaque fragrantia repleret: ante se vero Graeciam, totamque Europam
haberet; ut inde, tanquam tuba Domini sonora, etiam ultra-marinos populos suis
concionibus ac scriptis inclamaret et invitaret ad Christum; presertim, cum ibi fuerit
admodum commodus portus, plurimique mercatores ac homines peregrini ea loca adierint.”
The beauty of such a sentence is altogether beyond the force of English, and the elegant
paronomasia which repeatedly occurs in it, increasing the power of the original expression
to charm the ear and mind, is totally lost in a translation, but the meanings of the sentences
may be given for the benefit of those readers to whom the Latin is not familiar.――“Regard
the wonderful providence of God. John was stationed at Ephesus, on the shore of the
Aegean sea; so that there, as in a mirror, he might behold his peculiar province, Asia,
behind him, and might fill it with the incense of his prayers: before him too, he had Greece
and all Europe; so that there, as with the far-sounding trumpet of the Lord, he might
summon and invite to Christ, by his sermons and writings, even the nations beyond the sea,
by the circumstance that there, was a most spacious haven, and that vast numbers of
traders and travelers thronged to the place.”
Chrysostom speaks also of the importance of Ephesus as an apostolic station, alluding

to it as a strong hold of heathen philosophy; but there is no reason to think that John ever
distinguished himself by any assaults upon systems with which he was not, and could never
have been sufficiently acquainted to enable him to attack them; for in order to meet an evil,
it is necessary to understand it thoroughly. There is no hint of an acquaintance with
philosophy in any part of his writings, nor does any historian speak of his making converts
among them. Chrysostom’s words are,――“He fixed himself also in Asia, where anciently
all the sects of Grecian philosophy cultivated their sciences. There he flashed out in the
midst of the foe, clearing away their darkness, and storming the very citadel of demons. And
with this design he went to this place, so well suited to one who would work such wonders.”
(Homily 1, on John.)
The idea of John’s visit to Ephesus, where Timothy was already settled over the church
as bishop, has made a great deal of trouble to those who stupidly confound the office of an
apostle with that of a bishop, and are always degrading an apostle into a mere church-
officer. Such blunderers of course, are put to a vast deal of pains to make out how Timothy
could manage to keep possession of his bishopric, with the Apostle John in the same town
with him; for they seem to think that a bishop, like the flag-officer on a naval station, can
hold the command of the post not a moment after a senior officer appears in sight; but that
then down comes the broad blue pennon to be sure, and never is hoisted again till the
greater officer is off beyond the horizon. But no such idle arrangements of mere etiquette
were ever suffered to mar the noble and useful simplicity of the primitive church
government, in the least. The presence of an apostle in the same town with a bishop, could
no more interfere with the regular function of the latter, than the presence of a diocesan
bishop in any city of his diocese, excludes the rector of the church there, from his pastoral
charge. The sacred duties of Timothy were those of the pastoral care of a single
church,――a sort of charge that no apostle ever assumed out of Jerusalem; but John’s
apostolic duties led him to exercise a general supervision over a great number of churches.
All those in Little Asia would claim his care alike, and the most distant would look to him for
counsel; while that in Ephesus, having been so well established by Paul, and being blessed
by the pastoral care of Timothy, who had been instructed and commissioned for that very
place and duty, by him, would really stand in very little need of any direct attention from
John. Yet among his Jewish brethren he would still find much occasion for his missionary
labor, even in that city; and this was the sort of duty which was most appropriate to his
apostolic character; for the apostles were missionaries and not bishops.
Others pretend to say, however, that Timothy was dead when John arrived, and that
John succeeded him in the bishopric,――a mere invention to get rid of the difficulty, and
proved to be such by the assertion that the apostle was a bishop, and rendered suspicious
also by the circumstance of Timothy being so young a man.
The fable of the Virgin Mary’s journey, in company with John, to Ephesus, has been very
gravely supported by Baronius, (Annals, 44, § 29,) who makes it happen in the second year
of the reign of Claudius, and quotes as his authority a groundless statement, drawn from a
mis-translation of a synodical epistle from the council of Ephesus to the clergy at
Constantinople, containing a spurious passage which alludes to this story, condemning the
Nestorians as heretics, for rejecting the tale. There are, and have long been, however, a
vast number of truly discreet and learned Romanists, who have scorned to receive such
contemptible and useless inventions. Among these, the learned Antony Pagus, in his
Historico-Chronological Review of Baronius, has utterly refuted the whole story, showing the
spurious character of the passage quoted in its support. (Pagus, Critica Baronius Annals,
42. § 3.) Lampe quotes moreover, the Abbot Facditius, the Trevoltian collectors and
Combefisius, as also refuting the fable. Among the Protestant critics, Rivetus and Basnage
have discussed the same point.
Of the incidents of John’s life at Ephesus, no well authorized

account whatever can be given. Yet on this part of apostolic history
the Fathers are uncommonly rich in details, which are interesting,
and some of which present no improbability on examination; but their
worst character is, that they do not make their appearance until
above one hundred years after the date of the incidents which they
commemorate, and refer to no authority but loose and floating
tradition. In respect to these, too, occurs exactly the same difficulty
which has already been specified in connection with the traditionary
history of Peter,――that the same early writers, who record as true
these stories which are so probable and reasonable in their
character, also present in the same grave manner other stories,
which do bear, with them, on their very faces, the evidence of their
utter falsehood, in their palpable and monstrous absurdity. Among
the possible and probable incidents of John’s life, narrated by the
Fathers, are a journey to Jerusalem, and one also to Rome,――but
of these there is no certainty, nor any acceptable evidence. These
long journeys, too, are wholly without any sufficient assigned object,
which would induce so old a man to leave his quiet and useful
residence at Ephesus, to travel hundreds and thousands of miles.
The churches of both Rome and Jerusalem were under well
organized governments, which were perfectly competent to the
administration of their own affairs, without the presence of an
apostle; or, if they needed his counsel in an emergency, he could
communicate his opinions to them with great certainty, by message,
and with far more quickness and ease, than by a journey to them.
Such an occasion for a direct call on him, however, could but very
rarely occur,――nor would so unimportant an event as the death of
one bishop and the installation of another, ever induce him to take a
journey to sanction a mere formality by his presence. His help
certainly was not needed by any church out of his own little Asian
circle, in the selection of proper persons to fill vacant offices of
government or instruction. They knew best their own wants, and the
abilities of their own members to exercise any official duty to which
they might be called; while John, a perfect stranger to most of them,
would feel neither disposed nor qualified for meddling with any part
of the internal policy of other churches. But the principal
condemnation of the statement of his journey to Rome is contained
in the foolish story connected with it, by its earliest narrator,――that
on his arrival there, he was, by order of the emperor Domitian,
thrown into a vessel full of hot oil; but, so far from receiving the
slightest injury from such a frying, he came out of this greasy place
of torture, quite improved in every respect by the immersion; and, as
the story goes, arose from it perfumed like an athleta anointed for
the combat. There are very great variations, however, in the different
narrations of this affair; some representing the event as having
occurred in Ephesus, under the orders of the proconsul of Asia, and
not in Rome, under the emperor, as the earlier form of the fable
states. Among the statements which fix the scene of this miracle in
Rome, too, there is a very important chronological
difference,――some dating it under the emperor Nero, which would
carry it back as early as the time of Peter’s fabled martyrdom, and
implies a total contradiction of all established opinions on his
prolonged residence in the east. In short, the whole story is so
completely covered over with gross blunders and contradictions
about times and places, that it can not receive any place among the
details of serious and well-authorized history.
Thrown into a vessel of oil.――This greasy story has a tolerably respectable antiquity,
going farther back with its authorities than any other fable in the Christian mythology, except
Justin Martyr’s story about Simon Magus. The earliest authority for this is Tertullian, (A. D.
200,) who says that “at Rome, the Apostle John, having been immersed in hot oil, suffered
no harm at all from it.” (De Praescriptionibus adversus Haereticos, c. 36.) “In oleum igneum
immersus nihil passus est.” But for nearly two hundred years after, no one of the Fathers
refers to this fable. Jerome (A. D. 397.) is the next of any certain date, and speaks of it in
two passages. In the first (Against Jovinianus I. 14,) he quotes Tertullian as authority, but
bunglingly says, that “he was thrown into the kettle by order of Nero,”――a most palpable
error, not sanctioned by Tertullian. In the second passage, (Commentary on Matthew xx.
23,) he furthermore refers in general terms to “ecclesiastical histories, in which it was said
that John, on account of his testimony concerning Christ, was thrown into a kettle of boiling
oil, and came out thence like an athleta, to win the crown of Christ.” From these two
sources, the other narrators of the story have drawn it. Of the modern critics and historians,
besides the great herd of Papists, several Protestants are quoted by Lampe, as strenuously
defending it; and several of the greatest, who do not absolutely receive it as true, yet do not
presume to decide against it; as the Magdeburg Centuriators, (Century 1, lib. 2. c. 10,) who
however declare it very doubtful indeed, “rem incertissimam;”――Ittig, Le Clerc and
Mosheim taking the same ground. But Meisner, Cellarius, Dodwell, Spanheim, Heumann
and others, overthrow it utterly, as a baseless fable. They argue against it first, from the bad
character of its only ancient witness. Tertullian is well known as most miserably credulous,
and fond of catching up these idle tales; and even the devoutly credulous Baronius
condemns him in the most unmeasured terms for his greedy and undiscriminating love of
falsehood. Secondly, they object the profound silence of all the Fathers of the second, third
and fourth centuries, excepting him and Jerome; whereas, if such a remarkable incident
were of any authority whatever, those numerous occasions on which they refer to the
banishment of John to Patmos, which Tertullian connects so closely with this story, would
suggest and require a notice of the causes and attendant circumstances of that banishment,
as stated by him. How could those eloquent writers, who seem to dwell with so much delight
on the noble trials and triumphs of the apostles, pass over this wonderful peril and
miraculous deliverance? Why did Irenaeus, so studious in extolling the glory of John, forget
to specify an incident implying at once such a courageous spirit of martyrdom in this
apostle, and such a peculiar favor of God, in thus wonderfully preserving him? Hippolytus
and Sulpitius Severus too, are silent; and more than all, Eusebius, so diligent in scraping
together all that can heap up the martyr-glories of the apostles, and more particularly of
John himself, is here utterly without a word on this interesting event. Origen, too, dwelling
on the modes in which the two sons of Zebedee drank the cup of Jesus, as he prophesied,
makes no use of this valuable illustration.
On the origin of this fable, Lampe mentions a very ingenious conjecture, that some such
act of cruelty may have been meditated or threatened, but afterwards given up; and that
thence the story became accidentally so perverted as to make what was merely designed,
appear to have been partly put in execution.
In this decided condemnation of the venerable Tertullian, I am justified by the example of

Lampe, whose reverence for the authority of the Fathers is much greater than that of most
theologians of later days. He refers to him in these terms: “Tertullianus, cujus credulitas,
in arripiendis futilibus narratiunculis alias non ignota est.”――“Whose credulity in catching
up idle tales is well known in other instances.” Haenlein also calls him “der leichtglaubige
Tertullian,”――“the credulous Tertullian.” (Haenlein’s Einleitung in Neuen Testamentes vol.
III. p. 166.)
This miraculous event procured the highly-favored John, by this extreme unction, all the
advantages with none of the disadvantages of martyrdom; for in consequence of this peril
he has received among the Fathers the name of a “living martyr.” (ζοων μαρτυρ) Gregory of
Nazianzus, Chrysostom, Athanasius, Theophylact and others, quoted by Suicer, [sub voc.
μαρτυρ,] apply this term to him. “He had the mind though not the fate of a martyr.” “Non
defuit animus martyrio,” &c. [Jerome and Cyprian.] Through ignorance of the meaning of the
word μαρτυρ, in this peculiar application to John, the learned Haenlein seems to me to have
fallen into an error on the opinion of these Fathers about his mode of death. In speaking of
the general testimony as to the quiet death of this apostle, Haenlein says: “But Chrysostom,
only in one ambiguous passage, (Homily 63 in Matthew) and his follower Theophylact,
number the Apostle John among the martyrs.” [Haenlein’s Einleitung in Neuen Testamentes
vol. III. chap. vi. § 1, p. 168.] The fact is, that not only these two, but several other Fathers,
use the term in application to John, and they all do it without any implication of an actual,
fatal martyrdom; as may be seen by a reference to Suicer, sub voc.
So little reverence have the critical, even among the Romanists, for any of these old
stories about John’s adventures, that the sagacious Abbot Facditius (quoted by Lampe)
quite turns these matters into a jest. Coupling this story with the one about John’s chaste
celibacy, (as supported by the monachists,) he says, in reference to the latter, that if John
made out to preserve his chastity uncontaminated among such a people as the Jews were,
in that most corrupt age, he should consider it a greater miracle than if John had come safe
out of the kettle of boiling oil; but on the reverend Abbot’s sentiment, perhaps many will
remark with Lampe,――“quod pronuntiatum tamen nimis audax est.”――“It is rather too
bold to pronounce such an opinion.” Nevertheless, such a termination of life would be so
much in accordance with the standard mode of dispatching an apostle, that they would
never have taken him out of the oil-kettle, except for the necessity of sending him to
Patmos, and dragging him on through multitudes of odd adventures yet to come. So we
might then have had the satisfaction of winding up his story, in the literal and happy
application of the words of a certain venerable poetical formula for the conclusion of a
nursery tale, which here makes not only rhyme but reason,――
his banishment.
This fable of his journey to Rome is by all its propagators

connected with the well-authorized incident of his banishment to
Patmos. This event, given on the high evidence of the Revelation
which bears his name, is by all the best and most ancient authorities,
referred to the period of the reign of Domitian. The precise year is as
much beyond any means of investigation, as most other exact dates
in his and all the other apostles’ history. From the terms in which the
ancient writers commemorate the event, it is known, with tolerable
certainty, to have occurred towards the close of the reign of
Domitian, though none of the early Fathers specify the year. The first
who pretend to fix the date, refer it to the fourteenth year of that
emperor, and the most critical among the moderns fix it as late; and
some even in the fifteenth or last year of his reign; since that
persecution of the Christians, during which John seems to have
been banished, may be fairly presumed, from the known
circumstances as recorded in history, to have been the last great
series of tyrannical acts committed by this remarkably wicked
monarch. It certainly appears, from distinct assertions in the credible
records of ecclesiastical history, that there was a great persecution
begun about this time by Domitian, against the Christians; but there
is no reasonable doubt that the extent and vindictiveness of it has
been very much overrated, in the rage among the later Fathers, for
multiplying the sufferings of the early Christians far beyond the truth.
The first Christian writers who allude to this persecution very
particularly, specify its character as far less aggravated than that of
Nero, of which they declare it to have been but a shadow,――and
the persecutor himself but a mere fraction of Nero in cruelty. There is
not a single authenticated instance of any person’s having suffered
death in this persecution; all the creditable historians who describe it,
most particularly demonstrate that the whole range of punishments
inflicted on the subjects of it, was confined to banishment merely.
Another reason for supposing that this attack on the Christians was
very moderate in its character, is the important negative fact, that not
one heathen historian makes the slightest mention of any trouble
with the new sect, during that bloody reign; although such repeated,
vivid accounts are given of the dreadful persecution waged by Nero,
as related above, in the Life of Peter. It is reasonable to suppose,
therefore, that there were no great cruelties practised on them; but
that many of them, who had become obnoxious to the tyrant and his
minions, were quietly put out of the way, that they might occasion no
more trouble,――being sent from Rome and some of the principal
cities, into banishment, along with many others whose removal was
considered desirable by the rulers of Rome or the provinces; so that
the Christians, suffering with many others, and some of high rank
and character, a punishment of no very cruel nature, were not
distinguished by common narrators, from the general mass of the
banished; but were noticed more particularly by the writers of their
own order, who thus specified circumstances that otherwise would
not have been made known. Among those driven out from Ephesus
at this time, John was included, probably on no special accusation
otherwise than that of being prominent as the last survivor of the
original founders, among these members of the new faith, who by
their pure lives were a constant reproach to the open vices of the
proud heathen around them; and by their refusal to conform to
idolatrous observances, exposed themselves to the charge of non-
conformity to the established religion of the state,――an offence of
the highest order even among the Romans, whose tolerance of new
religions was at length limited by the requisition, that no doctrine
whatever should be allowed to aim directly at the overthrow of the
settled order of things. When, therefore, it began to be apprehended
that the religion of Jesus would, in its progress, overcome the
securities of the ancient worship of the Olympian gods, those who
felt their interests immediately connected with the system of idolatry,
in their alarmed zeal for its support, made use of the worst
specimens of imperial tyranny to check the advancing evil.
patmos.
The place chosen for his banishment was a dreary desert island in
the Aegean sea, called Patmos. It is situated among that cluster of
islands, called the Sporades, about twenty miles from the Asian
coast, and thirty or forty southwest of Ephesus. It is at this day
known by the observation of travelers, to be a most remarkably
desolate place, showing hardly anything but bare rocks, on which a
few poor inhabitants make but a wretched subsistence. In this
insulated desert the aged apostle was doomed to pass the lonely
months, far away from the enjoyments of Christian communion and
social intercourse, so dear to him, as the last earthly consolation of
his life. Yet to him, his residence at Ephesus was but a place of exile.
Far away were the scenes of his youth and the graves of his fathers.
“The shore whereon he loved to dwell,”――the lake on whose
waters he had so often sported or labored in the freshness of early
years, were still the same as ever, and others now labored there, as
he had done ere he was called to a higher work. But the homes of
his childhood knew him no more forever, and rejoiced now in the
light of the countenances of strangers, or lay in blackening
desolation beneath the brand of a wasting invasion. The waters and
the mountains were there still,――they are there now; but that which
to him constituted all their reality was gone then, as utterly as now.
The ardent friends, the dear brother, the faithful father, the fondly
ambitious and loving mother,――who made up his little world of life,
and joy, and hope,――where were they? All were gone; even his
own former self was gone too, and the joys, the hopes, the thoughts,
the views of those early days, were buried as deeply as the friends
of his youth, and far more irrevocably than they. Cut off thus utterly
from all that once excited the earthly and merely human emotions
within him, the whole world was alike a desert or a home, according
as he found in it communion with God, and work for his remaining
energies, in the cause of Christ. Wherever he went, he bore about
with him his resources of enjoyment,――his home was within
himself; the friends of his youth and manhood were still before him in
the ever fresh images of their glorious examples; the brother of his
heart was near him always, and nearest now, when the persecutions
of imperial tyranny seemed to draw him towards a sympathetic
participation in the pains and the glories of that bloody death. The
Lord of his life, the author of his hopes, the guide of his youth, the
cherisher of his spirit, was over and around him ever, with the
consolations of his promised presence,――“with him always, even to
the end of the world.”
the apocalypse.
The Revelation of John the Divine opens with a moving and

splendid view of these circumstances. Being, as it is recorded, in the
isle that is called Patmos, for preaching the word of God, and for
bearing witness of Jesus Christ, he was in his lonely banishment,
one Lord’s day, sitting wrapped in a holy spiritual contemplation,
when he heard behind him a great voice, as of a trumpet, which
broke upon his startled ear with a most solemnly grand annunciation
of the presence of one whose being was the source and end of all
things. As the amazed apostle turned to see the person from whom
came such portentous words, there met his eye a vision so dazzling,
yet appalling in its beauty and splendor, amid the bare, dark rocks
around, that he fell to the earth without life, and lay motionless until
the heavenly being, whose awful glories had so overwhelmed him,
recalled him to his most vivid energies, by the touch of his life-giving
hand. In the lightning-splendors of that countenance, far outshining
the glories of Sinai, reflected from the face of Moses, the trembling
eye of the apostolic seer recognized the lineaments of one whom he
had known in other days, and upon whose bosom he had hung in
the warm affection of youth. Even the eye which now flashed such
rays, he knew to be that which had once been turned on him in the
aspect of familiar love; nor did its glance now bear a strange or
forbidding expression. The trumpet-tones of the voice, which of old,
on Hermon, roused him from the stupor into which he fell at the sight
of the foretaste of these very glories, now recalled him to life in the
same encouraging words, “Be not afraid.” The crucified and
ascended Jesus, living, though once dead, now called on his
beloved apostle to record the revelations which should soon burst
upon his eyes and ears; that the churches that had lately been under
his immediate attention, might learn the approach of events which
most nearly concerned the advance of their faith. First, therefore,
addressing an epistolary charge to each of the seven churches, he
called them to a severe account for their various errors, and gave to
each such consolations and promises as were suited to its peculiar
circumstances. Then dropping these individualizing exhortations, he
leaves all the details of the past, and the minutiae of the state of the
seven churches, for a glance over the events of coming ages, and
the revolutions of empires and of worlds. The full explanation of the
scenes which follow, is altogether beyond the range of a mere
apostolic historian, and would require such ability and learning in the
writer,――such a length of time for their application to this matter,
and such an expanse of paper for their full expression, as are
altogether out of the question in this case. Some few points in this
remarkable writing, however, fall within the proper notice of the
apostle’s biographer, and some questions on the scope of the
Apocalypse itself, as well as on the history of it, as a part of the
sacred canon, will therefore be here discussed.
The minute history of the apostolic writings,――the discussion of

their particular scope and tenor,――and the evidences of their
inspiration and authenticity,――are topics, which fall for the most
part under a distinct and independent department of Christian
theology, the common details of which are alone sufficient to fill
many volumes; and are of course altogether beyond the compass of
a work, whose main object is limited to a merely historical branch of
religious knowledge. Still, such inquiries into these deeper points, as
truly concern the personal history of the apostles, are proper
subjects of attention, even here. The life of no literary or scientific
man is complete, which does not give such an account of his writings
as will show under what circumstances,――with what design,――for
what persons,――and at what time, they were written. But a minute
criticism of their style, or illustrations of their meaning, or a detail of
all the objections which have been made to them, might fairly be
pronounced improper intrusions upon the course of the narrative.
With the danger of such an extension of these investigations, in view,
this work here takes up those points in the history of John’s writings,
that seem to fall under the general rule in making up a personal and
literary biography.
In the case of this particular writing, moreover, the difficulties of an

enlarged discussion are so numerous and complicated, as to offer
an especial reason to the apostolic historian, for avoiding the almost
endless details of questions that have agitated the greatest minds in
Christendom, for the last four hundred years. And the decision of the
most learned and sagacious of modern critics, pronounces the
Apocalypse of John to be “the most difficult and doubtful book of the
New Testament.”
The points proper for inquiry in connection with a history of the life
of John, may be best arranged in the form of questions with their
answers severally following.
I. Did the Apostle John write the Apocalypse?
Many will doubtless feel disposed to question the propriety of thus bringing out, in a
popular book, inquiries which have hitherto, by a sort of common consent, been confined to
learned works, and wholly excluded from such as are intended to convey religious
knowledge to ordinary readers. The principle has been sometimes distinctly specified and
maintained, that some established truths in exegetical theology, must needs be always kept
among the arcana of religious knowledge, for the eyes and ears of the learned few, to whom
“it is given to know these mysteries;” “but that to them that are without,” they are ever to
remain unknown. This principle is often acted on by the theologians of Germany and
England, so that a distinct line seems to be drawn between an exoteric and an esoteric
doctrine,――a public and a private belief,――the latter being the literal truth, while the
former is such a view of things, as suits the common religious prejudices of the mass of
hearers and readers. But such is not the free spirit of true Protestantism; nor is any deceitful
doctrine of “accommodation” accordant with the open, single-minded honesty of apostolic
teachings. Taking from the persons who are the subjects of this history, something of their
simple freedom of word and action, for the reader’s benefit, several questions will be boldly
asked, and as boldly answered, on the authorship, the scope, and character of the
Apocalypse. And first, on the present personal question in hand, a spirit of tolerant regard
for opinions discordant with those of some readers, perhaps may be best learned, by
observing into what uncertainties the minds of the greatest and most devout of theologians,
and of the mighty founders of the Protestant faith, have been led on this very point.
The great Michaelis (Introduction to the New Testament, vol. IV. c. xxxiii. § 1.) apologizes
for his own doubts on the Apocalypse, justifying himself by the similar uncertainty of the
immortal Luther; and the remarks of Michaelis upon the character of the persons to whom
Luther thus boldly published his doubts, will be abundantly sufficient to justify the discussion
of such darkly deep matters, to the readers of the Lives of the Apostles.
Not only Martin Luther as here quoted by Michaelis, but the other great reformers of that
age, John Calvin and Ulric Zwingle, boldly expressed their doubts on this book, which more
modern speculators have made so miraculously accordant with anti-papal notions. Their
learned cotemporary, Erasmus, also, and the critical Joseph Scaliger, with other great
names of past ages, have contributed their doubts, to add a new mark of suspicion to the
Apocalypse.
“As it is not improbable that this cautious method of proceeding will give offense to some
of my readers, I must plead in my behalf the example of Luther, who thought and acted
precisely in the same manner. His sentiments on this subject are delivered, not in an
occasional dissertation on the Apocalypse, but in the preface to his German translation of it,
a translation designed not merely for the learned, but for the illiterate, and even for children.
In the preface prefixed to that edition, which was printed in 1522, he expressed himself in
very strong terms. In this preface he says: ‘In this book of the Revelation of St. John, I leave
it to every person to judge for himself: I will bind no man to my opinion; I say only what I
feel. Not one thing only fails in this book; so that I hold it neither for apostolical, nor
prophetical. First and chiefly, the apostles do not prophesy in visions, but in clear and plain
words, as St. Peter, St. Paul, and Christ in the gospel do. It is moreover the apostle’s duty to
speak of Christ and his actions in a simple way, not in figures and visions. Also no prophet
of the Old Testament, much less of the New, has so treated throughout his whole book of
nothing but visions: so that I put it almost in the same rank with the fourth book of Esdras,
and cannot any way find that it was dictated by the Holy Ghost. Lastly, let every one think of
it what his own spirit suggests. My spirit can make nothing out of this book; and I have
reason enough not to esteem it highly, since Christ is not taught in it, which an apostle is
above all things bound to do, as he says, (Acts i.) Ye are my witnesses. Therefore I abide by
the books which teach Christ clearly and purely.’
“But in that which he printed in 1534, he used milder and less decisive expressions. In
the preface to this later edition, he divides prophecies into three classes, the third of which
contains visions, without explanations of them; and of these he says: ‘As long as a
prophecy remains unexplained and has no determinate interpretation, it is a hidden silent
prophecy, and is destitute of the advantages which it ought to afford to Christians. This has
hitherto happened to the Apocalypse: for though many have made the attempt, no one to
the present day, has brought any thing certain out of it, but several have made incoherent
stuff out of their own brain. On account of these uncertain interpretations, and hidden
senses, we have hitherto left it to itself, especially since some of the ancient Fathers
believed that it was not written by the apostle, as is related in Lib. III. Church History. In this
uncertainty we, for our part, still let it remain: but do not prevent others from taking it to be
the work of St. John the apostle, if they choose. And because I should be glad to see a
certain interpretation of it, I will afford to other and higher spirits occasion to reflect.’
“Still however, he declared he was not convinced that the Apocalypse was canonical,
and recommended the interpretation of it to those who were more enlightened than himself.
If Luther then, the author of our reformation, thought and acted in this manner, and the
divines of the last two centuries still continued, without the charge of heresy, to print
Luther’s preface to the Apocalypse, in the editions of the German Bible of which they had
the superintendence, surely no one of the present age ought to censure a writer for the
avowal of similar doubts. Should it be objected that what was excusable in Luther would be
inexcusable in a modern divine, since more light has been thrown on the subject than there
had been in the sixteenth century, I would ask in what this light consists. If it consists in
newly discovered testimonies of the ancients, they are rather unfavorable to the cause; for
the canon of the Syrian church, which was not known in Europe when Luther wrote, decides
against it. On the other hand, if this light consists in a more clear and determinate
explanation of the prophecies contained in the Apocalypse, which later commentators have
been able to make out, by the aid of history, I would venture to appeal to a synod of the
latest and most zealous interpreters of it, such as Vitringa, Lange, Oporin, Heumann, and
Bengel, names which are free from all suspicion; and I have not the least doubt, that at
every interpretation which I pronounced unsatisfactory, I should have at least three voices
out of the five in my favor. At all events they would never be unanimous against me, in the
places where I declared that I was unable to perceive the new light, which is supposed to
have been thrown on the subject since the time of Luther.
“I admit that Luther uses too harsh expressions, where he speaks of the epistle of St.
James, though in a preface not designed for Christians of every denomination: but his
opinion of the Apocalypse is delivered in terms of the utmost diffidence, which are well
worthy of imitation. And this is so much the more laudable, as the Apocalypse is a book,
which Luther’s opposition to the church of Rome must have rendered highly acceptable to
him, unless he had thought impartially, and had refused to sacrifice his own doubts to
polemical considerations.”
To pretend to decide with certainty on a point, which Martin Luther boldly denied, and
which John David Michaelis modestly doubted, implies neither superior knowledge of the
truth, nor a more holy reverence for it; but rather marks a mere presumptuous self-
confidence, and an ignorant bigotry, arising from the prejudices of education. Yet from the
deep researches of the latter of these writers, and of other exegetical theologians since,
much may be drawn to support the view taken in the text of this Life of John, which is
accordant with the common notion of its authorship. The quotation just given, however, is
valuable as inculcating the propriety of hesitation and moderation in pronouncing upon
results.
The testimony of the Fathers, on the authenticity of the Apocalypse as a work of John,
the apostle, may be very briefly alluded to here. The full details of this important evidence
may be found by the scholar in J. D. Michaelis’s Introduction to the New Testament (Vol. IV.
c. xxxiii. § 2.) Hug’s Introduction to the New Testament (Vol. II. § 176.) Lardner’s Credibility
of Gospel History (Supplement, chapter 22.) Fabricii Bibliotheca Graeca. (Harles’s 4to.
edition with Keil’s, Kuinoel’s, Gurlitt’s, and Heyne’s notes, vol. IV. pp. 786‒795,
corresponding to vol. III. pp. 146‒149, of the first edition.) Lampe, Prolegomena to a
Johannine Theology.
Justin Martyr (A. D. 140,) is the first who mentions this book. He says, “A man among
us, named John, one of the apostles of Christ, has, in a revelation which was made to him,
prophesied,” &c. Melito (A. D. 177.) is quoted by Eusebius and by Jerome, as having written
a treatise on the Revelation. He was bishop of Sardis, one of the seven churches, and his
testimony would be therefore highly valuable, if it were certain whether he wrote for or
against the authenticity of the work. Probably he was for it, since he calls it “the Apocalypse
of John,” in the title of his treatise, and the silence of Eusebius about the opinion of Melito
may fairly be construed as showing that he did not write against it. Irenaeus, (A. D. 178,)
who in his younger days was acquainted with Polycarp, the disciple and personal friend of
John, often quotes this book as “the Revelation of John, the disciple of the Lord.” And in
another place, he says, “It was seen not long ago, almost in our own age, at the end of the
reign of Domitian.” This is the most direct and valuable kind of testimony which the writings
of the Fathers can furnish on any point in apostolic history; for Irenaeus here speaks from
personal knowledge, and, as will be hereafter shown, throws great light on the darkest
passage in the Apocalypse, by what he had heard from those persons who had seen John
himself, face to face, and who heard these things from his own lips. Theophilus of Antioch,
(A. D. 181,)――Clemens of Alexandria, (A. D. 194,――Tertullian of Carthage, (A. D.
200,)――Apollonius of Ephesus, (A. D. 211,)――Hippolytus of Italy, (A. D. 220,)――Origen
of Alexandria and Caesarea, (A. D. 230,)――all received and quoted it as a work of John
the apostle, and some testify very fully as to the character of the evidence of its authenticity,
received from their predecessors and from the contemporaries of John.
But from about the middle of the third century, it fell under great suspicion of being the
production of some person different from the apostle John. Having been quoted by
Cerinthus and his disciples, (a set of Gnostical heretics, in the first century,) in support of
their views, it was, by some of their opponents, pronounced to be a fabrication of Cerinthus
himself. At this later period, however, it suffered a much more general condemnation; but
though denied by some to be an apostolic work, it was still almost universally granted to be
inspired. Dionysius of Alexandria, (A. D. 250,) in a book against the Millenarians, who
rested their notions upon the millenial passages of this revelation, has endeavored to make
the Apocalypse useless to them in support of their heresy. This he has done by referring to
the authority of some of his predecessors, who rejected it on account of its maintaining
Cerinthian doctrines. This objection however, has been ably refuted by modern writers,
especially by Michaelis and Hug, both of whom, distinctly show that there are many
passages in the Revelation, so perfectly opposite to the doctrines of Cerinthus, that he
could never have written the book, although he may have been willing to quote from it such
passages as accorded with his notions about a sensual millenium,――as he could in this
way meet those, who did take the book for an inspired writing.
Dionysius himself, however, does not pretend to adopt this view of the authorship of it,
but rather thinks that it was the work of John the presbyter, who lived in Ephesus in the age
of John the apostle, and had probably been confounded with him by the early Fathers. This
John is certainly spoken of by Papias, (A. D. 120,) who knew personally both him and the
apostle; but Papias has left nothing on the Apocalypse, as the work of either of them. (The
substance of the whole argument of Dionysius is very elaborately given and reviewed, by
both Michaelis and Hug.) After this bold attack, the apostolic character of the work seems to
have received much injury among most of the eastern Fathers, and was generally rejected
by both the Syrian and Greek churches, having no place in their New Testament canon.
Eusebius, (A. D. 315,) who gives the first list of the writings of the New Testament, that is
known, divides all books which had ever been offered as apostolical, into three
classes,――the universally acknowledged, (ὁμολογουμενα homologoumena,)――the
disputed, (αντιλεγομενα antilegomena,)――and the spurious, (νοθα notha.) In the first class,
he puts all now received into the New Testament, except the epistle to the Hebrews, the
epistles of James and Jude, the second of Peter, the second and third of John, and the
Revelation. These exceptions he puts into the second, or disputed class, along with sundry
writings now universally considered apocryphal. Eusebius says also, “It is likely that the
Revelation was seen by John the presbyter, if not by John the apostle.”――Cyril of
Jerusalem, (A. D. 348,) in his catalogue of the Scriptures, does not allow this a place.
Epiphanius of Salamis, in Cyprus, (A. D. 368,) though himself receiving it as of apostolic
origin, acknowledged that others in his time rejected it. The council of Laodicea, (A. D. 363,)
sitting in the seat of one of the seven churches, did not give the Revelation a place among
the sacred writings of the New Testament, though their list includes all others now received.
Gregory, of Nazianzus, in Cappadocia, (A. D. 370,) gives a catalogue of the canonical
scriptures, but excludes the Revelation. Amphilochius, of Iconium, in Lycaonia, (A. D. 370,)
in mentioning the canonical scriptures, says, “The Revelation of John is approved by some;
but many say it is spurious.” The scriptural canon of the Syrian churches rejects it, even as
given by Ebed Jesu, in 1285; nor was it in the ancient Syriac version completed during the
first century; but the reason for this may be, that the Revelation was not then
promulgated.――Jerome of Rome, (A. D. 396,) receives it, as do all the Latin Fathers; but
he says, “the Greek churches reject it.”――Chrysostom (A. D. 398,) never quotes it, and is
not supposed to have received it. Augustin, of Africa, (A. D. 395,) receives it, but says that it
was not received by all in his time. Theodoret, (A. D. 423,) of Syria, and all the ecclesiastics
of that country, reject it also.
The result of all this evidence is, as will be observed by glancing over the dates of the
Fathers quoted, that, until the year 250, no writer can be found who scrupled to receive the
Apocalypse as the genuine work of John the apostle,――that the further back the Fathers
are, the more explicit and satisfactory is their testimony in its favor,――and that the fullest of
all, is that of Irenaeus, who had his information from Polycarp, the most intimate and
beloved disciple of John himself. Now, where the evidence is not of the ordinary cumulative
character, growing weighty, like a snowball, the farther it travels from its original starting-
place, but as here, is strongest at the source,――it may justly be pronounced highly
valuable, and an eminent exception to the usual character of such historical proofs, which,
as has been plentifully shown already in this book, are too apt to come “but-end first,” as the
investigator travels from the last to the first. It will be observed also, by a glance at the
places where these Fathers flourished, that all those who rejected the Apocalypse belonged
to the eastern section of the churches, including both the Greeks and the Syrians, while
the western churches, both the Europeans and Latino-Africans, adopted the Apocalypse
as an apostolic writing. This is not so fortunate a concurrence as that of the dates, since the
easterns certainly had better means of investigating such a point than the westerns. A
reason may be suggested for this, in the circumstance, that the Cerinthians and other
heretics, who were the occasion of the first rejection of the Apocalypse, annoyed only the
eastern churches, and thus originated the mischief only among them. Lampe, Michaelis and
others, indeed, quote Caius of Rome, as a solitary exception to this geographical
distribution of the difficulty, but Paulus and Hug have shown that the passage in Caius, to
which they refer, has been misapprehended, as the scholar may see by a reference to
Hug’s Introduction to the New Testament, vol. II. pp. 647‒650, [Wait’s translation,] pp. 593‒
596, [original.] There is something in Jerome too, which implies that some of the Latins, in
his time, were beginning to follow the Greek fashion of rejecting this book, but he scouts this
new notion, and says he shall stick to the old standard canon.
The internal evidence is also so minutely protracted in its character, that only a bare
allusion to it can be here permitted, and reference to higher and deeper sources of
information, on such an exegetical point, may be made for the benefit of the scholar.
Lampe, Wolf, Michaelis, Mill, Eichhorn and others, quoted by Fabricius, [Bibliotheca
Graeca, vol. IV. p. 795, note 46.] Hug and his English translator, Dr. Wait, are also full on
this point.
This evidence consists for the most part in a comparison of passages in this book with
similar ones in the other writings of John, more especially his gospel. Wetstein, in particular,
has brought together many such parallelisms, some of which are so striking in the peculiar
expressions of John, and yet so merely accidental in their character, as to afford most
satisfactory evidence to the nicest critics, of the identity of authorship. A table of these
coincidences is given from Wetstein, by Wait, Hug’s translator, (p. 636, note.) Yet on this
very point,――the style,――the most serious objection to the Apocalypse, as a work of the
author of John’s gospel, has always been founded;――the rude, wild, thundering sublimity
of the vision of Patmos, presenting such a striking contrast with the soft, love-teaching, and
beseeching style of the gospel and the epistles of John. But such objectors have forgotten
or overlooked the immense difference between the circumstances under which these works
were suggested and composed. Their period, their scene, their subject, their object, were all
widely removed from each other, and a thoughtful examination will show, that writings of
such widely various scope and tendency could not well have less striking differences, than
those observable between this and the other writings of John. In such a change of
circumstances, the structure of sentences, the choice of words, and the figures of speech,
could hardly be expected to show the slightest similarity between works, thus different in
design, though by the same author. But in the minuter peculiarities of language, certain
favorite expressions of the author,――particular associations of words, such as a forger
could never hit upon in that uninventive age,――certain personal views and sentiments on
trifling points, occasionally modifying the verbal forms of ideas――these and a multitude of
other characteristics, making up that collection of abstractions which is called an author’s
style,――all quite beyond the reach of an imitator, but presenting the most valuable and
honest tests to the laborious critic,――constitute a series of proofs in this case, which none
can fully appreciate but the investigators and students themselves.
ii. with what design was the apocalypse written?
There is no part of the Bible which has been the subject of so

much perversion, or on which the minds of the great mass of
Christian readers have been suffered to fall into such gross errors,
as the Apocalypse. This is the opinion of all the great exegetical
theologians of this age, who have examined the scope of the work
most attentively; and from the time of Martin Luther till this moment,
the opinions of the learned have for the most part been totally
different from those which have made up the popular
sentiment,――none or few, caring to give the world the benefit of the
simple truth, which might be ill received by those who loved
darkness rather than light; and those who knew the truth, have
generally preferred to keep the quiet enjoyment of it to themselves.
This certainly is much to be regretted; for in consequence of this
culpable negligence of the duty of making religious knowledge
available for the good of the whole, this particular apostolic writing
has been the occasion of the most miserable and scandalous
delusions among the majority even of the more intelligent order of
Bible readers,――delusions, which, affecting no point whatever in
creeds and confessions of faith, those bulwarks of sects, have been
suffered to rage and spread their debasing error, without subjecting
those who thus indulged their foolish fancies, to the terrors of
ecclesiastical censure. The Revelation of John has, accordingly, for
the last century or two, been made a licensed subject for the
indulgence of idle fancies, and used as a grand storehouse for every
“filthy dreamer” to draw upon, for the scriptural prophetical supports
of his particular notions of “the signs of the times,” and for the
warrant of his special denunciations of divine wrath and coming ruin,
against any system that might happen to be particularly abominable
in his religious eyes. Thus, a most baseless delusion has been long
suffered to pervade the minds of common readers, respecting the
general scope of the Apocalypse, perverting the latter parts of it into
a prophecy of the rise, triumph and downfall of the Romish papal
tyranny; while in respect to the minor details, every schemer has
been left to satisfy himself, as his private fancy or sectarian zeal
might direct him. Now, not only is all this ranting trash directly
opposed to the clear, natural and simple explanations, given by
those very persons among the earliest Christian writers, who had
John’s own private personal testimony as to his real meaning, in the
dark passages which have in modern times been made the subject
of such idle, fanciful interpretations; but they are so palpably

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

3. Suppose Ripco owns the building from which it operates. If:

4. Which of the following are implicit costs for a typical firm?

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7. Unlike implicit costs, explicit costs:

8. An implicit cost is:

9. The opportunity cost of a resource:

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10. Explicit costs are:

18. Accounting profit equals:

20. Opportunity cost usually:

21. Economic profit is defined as _____.

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23. Which of the following would be shown on a firm’s accounting statement?

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27. A firm’s accounting profit is equal to _____.

28. Economic profit is defined as:

29. A firm’s economic profit is equal to _____.

30. Accounting profit is:

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32. Normal profit is defined as:

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37. If a shoe store earns more than a normal profit, its:

Assistant’s salary $20,000

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45. The short run is a period of time:

49. The length of time that represents the long run:

50. The short run is a period of time:

52. Marginal product is defined as:

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a. Before the first unit of labor

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a. Before the first unit of labor

59. Increasing marginal returns are generally the result of _____.

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64. The law of diminishing marginal returns states that:

69. In the range of increasing marginal returns, total product is _____.

71. Which of the following is true of marginal product?

72. The marginal product of labor is the _____.

73. To a firm facing constant input prices, increasing marginal returns:

74. A variable cost is one that changes _____.

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75. Fixed costs are defined as:

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77. The law of diminishing marginal returns explains why:

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82. As output rises, marginal product eventually diminishes and _____.

83. If variable cost at each output level doubles, then: