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Exam 13: The Costs of Production

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Question 151

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Scenario 13-7 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 13-7.What is the shape of Farmer Jack's marginal cost curve?

A) upward sloping
B) downward sloping
C) first upward sloping,then downward sloping
D) constant

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

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Question 152

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If marginal cost is equal to average total cost,then

A) marginal cost is minimized.
B) average total cost is minimized.
C) average variable cost is minimized.
D) marginal cost is zero.

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

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Question 153

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Which of the following costs of publishing a book is a fixed cost?

Scenario 13-2 Zach withdrew $400,000 out of his personal savings account and used it to start his new cookie business.The bank account pays 3 percent interest per year.During the first year of his business,Zach sold 6,000 boxes of cookies for $2.50 per box.Also during the first year,the cookie business made monetary outlays of $9,000.You may assume that there is no opportunity cost to Zach's time. -Refer to Scenario 13-2.Zach's economic profit for the year was

Which of the following is an example of an implicit cost?

Figure 13-7 -Refer to Figure 13-7.Quantity C represents the output level where the firm

Which of the following would be an example of an implicit cost?

Table 13-8 Eileen's Elegant Earrings produces pairs of earrings for its mail order catalogue business.Each pair is shipped in a separate box.She rents a small room for $150 a week in the downtown business district that serves as her factory.She can hire workers for $275 a week.There are no implicit costs. -Refer to Table 13-8.What is the total cost associated with making 890 boxes of earrings per week?

Table 13-6 -Refer to Table 13-6.What is the marginal cost of producing the fifth unit of output?

Scenario 13-5 Samantha has been working for a law firm and earning an annual salary of $80,000.She decides to open her own practice.Her annual expenses will include $15,000 for office rent,$3,000 for equipment rental,$1,000 for supplies,$1,200 for utilities,and a $35,000 salary for a secretary/bookkeeper.Samantha will cover her start-up expenses by cashing in a $20,000 certificate of deposit on which she was earning annual interest of $500. -Refer to Scenario 13-5.Samantha's annual implicit costs will equal

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

Table 13-1 Alyson's Pet Sitting Service -Refer to Table 13-1.What is the marginal product of the third worker?

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9.The firm experiences economies of scale at which output levels?

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 = 12,Q = 122) and (L = 13,Q = 132) .Then the marginal product of the 13th worker is

If marginal cost is below average total cost,then average total cost

Figure 13-4 -Refer to Figure 13-4.Which curve is most likely to represent average total cost?

Figure 13-6 -Refer to Figure 13-6.Which of the figures represents the production function for a firm?

Table 13-4 Gallo Cork Factory -Refer to Table 13-4.Assume Gallo's currently employs 2 workers.What is the marginal product of labor when Gallo's adds a 3rd worker?

Figure 13-10 -Refer to Figure 13-10.The firm experiences diseconomies of scale if it changes its level of output from

The average total cost curve is unaffected by diminishing marginal product.