Exam 13: The Costs of Production

On a 100-acre farm, a farmer is able to produce 3,000 bushels of wheat when he hires 2 workers. He is able to produce 4,400 bushels of wheat when he hires 3 workers. Which of the following possibilities is consistent with the property of diminishing marginal product?

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.

Table 13-4 Charles's Math Tutoring -Refer to Table 13-4. Charles's math tutoring company experiences diminishing marginal productivity with the addition of the

If the average-total-cost curve is falling, then the marginal-cost curve must also be falling.

Marginal cost is equal to

Suppose that Danita owns a cupcake bakery. In the short run, at least one of her inputs is fixed. Provide one or two examples of the types of inputs that could be fixed in the short run.

Which of the following is the best example of a variable cost?

Table 13-12 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 13-12. What is the total cost associated with making 890 boxes of earrings per week?

Katherine gives piano lessons for $15 per hour. She also grows flowers, which she arranges and sells at the local farmer's market. One day she spends 5 hours planting $50 worth of seeds in her garden. Once the seeds have grown into flowers, she can sell them for $150 at the farmer's market. Katherine's accounting profits are

Table 13-14 -Refer to Table 13-14. What is the fixed cost of production for this firm?

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

The cost of producing an additional unit of output is the firm's

Anya has decided to start her own hair-styling salon. To purchase the necessary equipment, Anya withdrew $10,000 from her savings account, which was earning 3% interest, and borrowed an additional $5,000 from the bank at an interest rate of 8%. What is Anya's annual opportunity cost of the financial capital that has been invested in the business?

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. Which of the curves is most likely to characterize the short-run average total cost curve of the smallest factory?

​​​Table 13-7 -Refer to Table 13-7. ​What is the marginal product of the third worker?

Table 13-9 -Refer to Table 13-9. The average total cost of producing 240 units is

Table 13-15 -Refer to Table 13-15. What is average fixed cost when output is 40 units?

Economists and accountants both include forgone income as a cost to a small business owner.

Scenario 13-17 If Farmer Brown plants no seeds on his farm, he gets no harvest. If he plants 1 bag of seeds, he gets 5 bushels of wheat. If he plants 2 bags, he gets 9 bushels. If he plants 3 bags, he gets 12 bushels. A bag of seeds costs $120, and seeds are his only cost. -Refer to Scenario 13-17. Farmer Brown's marginal-cost curve is

The most likely explanation for economies of scale is