Exam 7: Production and Cost in the Firm

Maryann and Don want to open their own deli.To do so, Maryann must give up her job, at which she earns $20, 000 per year, and Don must give up his part-time job, at which he earns $10, 000 per year.They must liquidate their money market fund, which earns $1, 000 interest annually.The rent on the building is $10, 000 per year, and expenses for such necessities as utilities, corned beef, and pickles are $35, 000 annually.What is the explicit cost per year of operating the deli?

If the marginal product of an input is negative, the total product must also be negative.

Economies of scale can be caused by

Exhibit 7-11 Movement from point b to point c in Exhibit 7-11 indicates that the firm is experiencing

If the average height in the classroom were 5 feet 10 inches and Patrick Ewing, who is 7 feet tall, came in and sat down,

Exhibit 7-7 Fixed cost in Exhibit 7-7 equals

The law of diminishing returns explains why

A young chef is considering opening his own sushi bar.To do so, he would have to quit his current job, which pays $20, 000 a year, and take over a store building he owns and currently rents for $6, 000 a year.His expenses at the sushi bar would be $50, 000 for food and $2, 000 for gas and electricity.What is the minimum revenue he must earn per year in order for it to be worth his while to open his sushi bar?

Suppose a professor gives up her teaching job to devote her time to writing textbooks.If salaries of professors rise,

Minimum efficient scale is the level of output at which

Exhibit 7-3 In Exhibit 7-3, the marginal product of the third worker is

If a firm is experiencing diseconomies of scale, its long-run marginal cost curve is upward sloping.

A young chef is considering opening his own sushi bar.To do so, he would have to quit his current job, which pays $20, 000 a year, and take over a store building that he owns and currently rents to his brother for $6, 000 a year.His expenses at the sushi bar would be $50, 000 for food and $2, 000 for gas and electricity.What are his implicit costs?

If marginal cost is less than average total cost,

Exhibit 7-5 In Exhibit 7-5, what is fixed cost at 15 units of output?

Exhibit 7-2 Given the information in Exhibit 7-2, what is the marginal product of the third unit of labor?

Exhibit 7-5 In Exhibit 7-5, what is variable cost when no output is being produced?

The law of diminishing marginal returns is first evident in the following table

In the short run, which of the following is likely to be a variable cost to a physician?

Exhibit 7-14 Total Cost Curve In Exhibit 7-14, what is variable cost when no output is being produced?