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Exam 13: The Costs of Production.

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Question 31

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Table 13-7 The Flying Elvis Copter Rides -Refer to Table 13-7.What is the value of C?

A) $25
B) $50
C) $100
D) $200

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

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Question 32

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The total cost to the firm of producing zero units of output is

A) zero in both the short run and the long run.
B) its fixed cost in the short run and zero in the long run.
C) its fixed cost in both the short run and the long run.
D) its variable cost in both the short run and the long run.

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

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Question 33

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Marginal cost equals (i) change in total cost divided by change in quantity produced. (ii) change in variable cost divided by change in quantity produced. (iii) the average fixed cost of the current unit.

Bob Edwards owns a bagel shop.Bob hires an economist who assesses the shape of the bagel shop's average total cost (ATC)curve as a function of the number of bagels produced.The results indicate a U-shaped average total cost curve.Bob's economist explains that ATC is U-shaped for two reasons.The first is the existence of diminishing marginal product,which causes it to rise.What would be the second reason? Assume that the marginal cost curve is linear.(Hint: The second reason relates to average fixed cost)

Fixed costs can be defined as costs that

Accounting profit is equal to

Which of the following statements about costs is correct?

Figure 13-2 -Refer to Figure 13-2.The graph illustrates a typical production function.Based on its shape,what does the corresponding total cost curve look like?

Joy sells 200 glasses of iced tea at $0.50 each.Her total costs are $25.Her profits are

Scenario 13-17 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 13-17.Average total cost will be

Bev is opening her own court-reporting business.She financed the business by withdrawing money from her personal savings account.When she closed the account,the bank representative mentioned that she would have earned $300 in interest next year.If Bev hadn't opened her own business,she would have earned a salary of $25,000.In her first year,Bev's revenues were $30,000.Which of the following statements is correct?

The opportunity cost of capital is an implicit cost almost every business incurs.

Table 13-7 The Flying Elvis Copter Rides -Refer to Table 13-7.What is the value of J?

Katherine gives piano lessons for $15 per hour.She also grows flowers,which she arranges and sells at the local farmer's market.One day she spends 5 hours planting $50 worth of seeds in her garden.Once the seeds have grown into flowers,she can sell them for $150 at the farmer's market.Katherine's accounting profits are

Table 13-1 -Refer to Table 13-1.What is total output when 5 workers are hired?

Table 13-15 Consider the following table of long-run total cost for four different firms: -Refer to Table 13-13.Which firm's long-run marginal cost decreases as output increases?

In some cases,specialization allows larger factories to produce goods at a lower average cost than smaller factories.

For a construction company that builds houses,which of the following costs would be a fixed cost?

A student might describe information about the costs of production as

When a firm experiences economies of scale,long-run average total cost falls as the quantity of output increases.