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Exam 13: The Costs of Production

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Question 121

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A firm has a fixed cost of $500 in its first year of operation. When the firm produces 100 units of output, its total costs are $3,500. When it produces 101 units of output, its total costs are $3,750. What is the marginal cost of producing the 101st unit of output?

A) $250
B) $275
C) $340.91
D) $350

E) A) and B)
F) All of the above

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Question 122

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Johnny is a sophomore in college and has a 1.5 cumulative grade point average (GPA) . Johnny's cumulative GPA will fall even further next semester if he performs worse than (i) his cumulative GPA. (ii) he ever performed before. (iii) he did last semester.

A) (i) and (ii) only
B) (i) and (iii) only
C) (ii) and (iii) only
D) (i) , (ii) , and (iii)

E) C) and D)
F) A) and B)

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Question 123

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Scenario 13-20 Suppose that a given firm experiences decreasing marginal product of labor with the addition of each worker regardless of the current output level. -Refer to Scenario 13-20. Average fixed cost will be

Scenario 13-8 Wanda owns a lemonade stand. She produces lemonade using five inputs: water, sugar, lemons, paper cups, and labor. Her costs per glass are as follows: $0.01 for water, $0.02 for sugar, $0.03 for lemons, $0.02 for cups, and $0.10 for the opportunity cost of her labor. She can sell 300 glasses for $0.50 each. -Refer to Scenario 13-8. What are Wanda's total economic profits?

A total-cost curve shows the relationship between the

Table 13-9 -Refer to Table 13-9. For the firm whose production function and costs are specified in the table, its average-total-cost curve is

Accountants keep track of the money that flows into and out of firms.

Kate is a florist. Kate can arrange 20 bouquets per day. She is considering hiring her husband William to work for her. William can arrange 18 bouquets per day. What would be the total daily output of Kate's firm if she hired her husband?

Suppose that for a particular firm the only variable input into the production process is labor and that output equals zero when no workers are hired. In addition, suppose that the average total cost when 5 units of output are produced is $30, and the marginal cost of the sixth unit of output is $60. What is the average total cost when six units are produced?

Table 13-9 -Refer to Table 13-9. For the firm whose production function and costs are specified in the table, its total-cost curve is

Average total cost and marginal cost express information that is already contained in a firm's total cost.

Let L represent the number of workers hired by a firm, and let Q represent that firm's quantity of output. Assume two points on the firm's production function are (L = 5, Q = 125) and (L = 6, Q = 152) . Then the marginal product of the 6th worker is

The long-run average total cost curve is always

In the long run,

Table 13-18 -Refer to Table 13-18. What is the average variable cost of producing 500 units of output?

Suppose a certain firm is able to produce 165 units of output per day when 15 workers are hired. The firm is able to produce 181 units of output per day when 16 workers are hired, holding other inputs fixed. The marginal product of the 16th worker is

Scenario 13-10 Jessica makes photo frames. She spends $5 on the materials for each photo frame. She can create one photo frame in an hour. She earns $10 per hour at a part-time job at the local coffee shop. She can sell a photo frame for $30 each. -Refer to Scenario 13-10. An economist would calculate the total cost for one photo frame to be

Jaxon borrows $10,000 from a bank and withdraws $20,000 from his personal savings to open a tattoo parlor. The interest rate is 3 percent for both the bank loan and his personal savings. Jaxon's implicit costs are $900. ​

The things that must be forgone to acquire a good are called

Scenario 13-20 Suppose that a given firm experiences decreasing marginal product of labor with the addition of each worker regardless of the current output level. -Refer to Scenario 13-20. Average total cost will be