Exam 7: Production Costs

Exhibit 7-7 Cost schedule for a firm Quantity Total Cost Marginal Cost 0 \ 200 1 900 2 \ 900 3 3,000 -In Exhibit 7-7, by filling in the blanks it can be determined that the marginal cost of the first unit of output is:

Suppose Joe Rich owns his own company and does not pay himself a salary. This means the salary he could have earned in alternative employment is considered an implicit cost for the firm.

The short run is a time period such that:

Sam quits his job as an airline pilot and opens his own pilot training school. He was earning $40,000 as a pilot. He withdraws $10,000 from his savings where he was earning 6 percent interest and uses the money in his new business. He uses a building he owns as a hanger and could rent it out for $5,000 per year. He rents a computer for $1,200, buys office supplies for $500, rents an airplane for $6,000, pays $1,300 for fuel and maintenance, and hires one worker for $30,000. Sam's total revenue from pilot training classes this year equaled $90,400. Sam's explicit costs this year equals:

What is the shape of the average fixed cost curve for a firm in the short run?

A firm has $200 million in total revenue and explicit costs of $190 million. If its owners have invested $100 million in the company at an opportunity cost of 10 percent interest per year, the firm's accounting profit is:

Implicit costs are:

Which of the following is true about average fixed cost?

If both the marginal cost and the average variable cost curves are U-shaped. At the minimum point on the average variable cost curve, the marginal cost must be:

Exhibit 7-10 Short-run cost schedule for book publisher's hourly production Total Output Total Variable Cost Total Cost 0 cases of books \ 0 \ 200 1 100 300 2 150 350 3 250 450 4 450 650 -In Exhibit 7-10, the average variable cost of producing 2 cases of books is:

Exhibit 7-8 Costs schedules for producing pizza Pizzas Fixed Cost Variable Cost Total Cost Marginal Cost 0 \ \ \ \ 1 5 2 13 3 10 4 100 140 5 20 6 85 7 215 -By filling in the blanks in Exhibit 7-8, the marginal cost of the fourth pizza is shown to be equal to:

Total fixed cost are costs that are fixed with respect to:

An economist left her $100,000-a-year teaching position to work full-time in her own consulting business. In the first year, she had total revenue of $200,000 and business expenses of $100,000. She made a(n):

Variable inputs are defined as any resource that:

In the long run, all costs are considered variable.

The amount of money that could have been made by renting a piece of land to be used for building an office building instead of using the land for employee parking is a(n):

Diseconomies of scale occur when high levels of output are produced in a short period of time.

Which of the following statements is true?

In the long run, a firm might experience rising per-unit cost due to:

The total fixed cost remains constant as which of the following varies?