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Exam 13: The Costs of Production.

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Question 141

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When calculating a firm's profit,an economist will subtract only

A) explicit costs from total revenue because these are the only costs that can be measured explicitly.
B) implicit costs from total revenue because these include both the costs that can be directly measured as well as the costs that can be indirectly measured.
C) the opportunity costs from total revenue because these include both the implicit and explicit costs of the firm.
D) the marginal cost because the cost of the next unit is the only relevant cost.

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

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Question 142

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Table 13-11 Teacher's Helper is a small company that has a subcontract to produce instructional materials for disabled children in public school districts. The owner rents several small rooms in an office building in the suburbs for $600 a month and has leased computer equipment that costs $480 a month. -Refer to Table 13-11.What is the marginal cost of creating the tenth instructional module in a given month?

A) $900
B) $1,250
C) $2,500
D) $3,060

E) A) and D)
F) None of the above

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Question 143

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Suppose that a firm has only one variable input,labor,and firm output is zero when labor is zero.When the firm hires 6 workers the firm produces 90 units of output.Fixed costs of production are $6 and the variable cost per unit of labor is $10.The marginal product of the seventh unit of labor is 4.Given this information,what is the average variable cost of production when the firm hires 7 workers?

When economists speak of a firm's costs,they are usually excluding the opportunity costs.

Variable cost divided by the change in quantity produced is

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

Table 13-5 -Refer to Table 13-5.The marginal product of the fourth worker is

What effect,if any,does diminishing marginal product have on the shape of the marginal cost curve?

Randy is a minor-league baseball player.His current cumulative batting average is 0.270.Randy believes that if he can raise his cumulative batting average to 0.300,he will have a chance to play in the major leagues.Which of the following statements is correct?

Average total cost (ATC) is calculated as follows:

Scenario 13-2 Chelsea wants to start her own Christmas ornament business. She can purchase a suitable factory that costs $100,000. Chelsea currently has $150,000 in the bank earning 3 percent interest per year. -Refer to Scenario 13-2.Suppose Chelsea purchases the factory using $50,000 of her own money and $50,000 borrowed from a bank at an interest rate of 6 percent.What is Chelsea's annual opportunity cost of purchasing the factory?

Table 13-6 Wooden Chair Factory -Refer to Table 13-6.Each worker at the Wooden Chair Factory costs $12 per hour.The cost of each machine is $20 per day regardless of the number of chairs produced.If the factory produces at a rate of 70 chairs per hour and operates 8 hours per day,what is the factory's total labor cost per day?

When a firm is experiencing economies of scale,long-run

The shape of the marginal cost curve tells a producer something about the marginal product of her workers.

If the marginal cost of producing the tenth unit of output is $2.50,and if the average total cost of producing the tenth unit of output is $3,then at ten units of output,average total cost is rising.

Pete owns a shoe-shine business.Which of the following costs would be implicit costs? (i) shoe polish (ii) rent on the shoe stand (iii) wages Pete could earn delivering newspapers (iv) interest that Pete's money was earning before he spent his savings to set up the shoe-shine business

Figure 13-3 -Refer to Figure 13-3.Assuming that the firm depicted produces cookies,which of the statements below is most consistent with the shape of the total cost curve?

Figure 13-3 -Refer to Figure 13-3.Which of the following is true of the production function (not pictured) that underlies this total cost function? (i) Total output increases as the quantity of inputs increases but at a decreasing rate. (ii) Marginal product is diminishing for all levels of input usage. (iii) The slope of the production function decreases as the quantity of inputs increases.

Economists assume that the goal of the firm is to maximize total

For a large firm that produces and sells automobiles,which of the following costs would be a variable cost?