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Exam 13: The Costs of Production.

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Question 221

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Average total cost tells us the

A) total cost of the first unit of output, if total cost is divided evenly over all the units produced.
B) cost of a typical unit of output, if total cost is divided evenly over all the units produced.
C) cost of the last unit of output, if total cost does not include a fixed cost component.
D) variable cost of a firm that is producing at least one unit of output.

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

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Question 222

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A local potato chip company plans to operate out of its current factory,which is estimated to last 25 years.All cost decisions it makes during the 25-year period

A) are short-run decisions.
B) are long-run decisions.
C) involve only maintenance of the factory.
D) are zero because the cost decisions were made at the beginning of the business.

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

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Question 223

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The economic field of industrial organization examines how firms' decisions about prices and quantities depend on the market conditions they face.

Which of the following statements is not correct?

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 176 units of output per day when 16 workers are hired,holding other inputs fixed.The marginal product of the 16th worker is

Eldin is a house painter.He can paint three houses per week.He is considering hiring his friend Murphy.Together,Eldin and Murphy can paint five houses per week.What is Murphy's marginal product?

Foregone investment opportunities are an example of

When comparing short-run average total cost with long-run average total cost at a given level of output,

The fact that many inputs are fixed in the short run but variable in the long run has little impact on the firm's cost curves.

Figure 13-3 -Refer to Figure 13-3.The changing slope of the total cost curve reflects

When a firm is making a profit-maximizing production decision,which of the following principles of economics is likely to be most important to the firm's decision?

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

Table 13-12 Betty's Bakery -Refer to Table 13-12.What is the average fixed cost of producing 8 cakes at Betty's Bakery?

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

Implicit costs

Although economists and accountants treat many costs differently,they both treat the cost of capital the same.

Table 13-14 Listed in the table are the long-run total costs for three different firms. -Refer to Table 13-14.Which firm is experiencing constant returns to scale?

Scenario 13-15 Farmer Jack is a watermelon farmer. If Jack plants no seeds on his farm, he gets no harvest. If he plants 1 bag of seeds, he gets 30 watermelons. If he plants 2 bags of seeds, he gets 50 watermelons. If he plants 3 bags of seeds he gets 60 watermelons. A bag of seeds costs $100, and the costs of seeds are his only costs. -Refer to Scenario 13-15.Which of the following statements is (are) true? (i) Farmer Jack experiences decreasing marginal product. (ii) Farmer Jack's production function is nonlinear. (iii) Farmer Jack's total cost curve is linear.

In the short run,if a firm produces nothing,total costs are zero.

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