Exam 13: The Costs of Production

Scenario 13-11 Walter builds birdhouses. He spends $5 on the materials for each birdhouse. He can build one in 30 minutes. He is semi-retired but earns $8 per hour at the local hardware store. He can sell a birdhouse for $20 each. -Refer to Scenario 13-11. The explicit cost for one birdhouse is

Marginal costs are costs that do not vary with the quantity of output produced.

In the long run the local coffee shop incurs total costs of $625 when output is 1,250 cups of coffee and $750 when output is 1,500 cups of coffee. For this range of output, the coffee shop exhibits

Although economists and accountants treat many costs differently, they both treat the cost of capital the same.

The typical total-cost curve is U-shaped.

The production function depicts a relationship between which two variables? Also, draw a production function that exhibits diminishing marginal product.

Consider a small hair styling salon. List some examples of explicit costs of this business.

Table 13-20 Listed in the table are the long-run total costs for three different firms. -Refer to Table 13-20. Firm B is experiencing diseconomies of scale.

Jennifer is a junior in college. Her current cumulative grade point average (GPA) is 3.5 out of a 4.0 scale. Jennifer is hoping that by the time she graduates, she can raise her cumulative GPA to a 3.7. Which of the following statements is correct?

Describe the relationship between average total cost and marginal cost.

Average total cost tells us the

If the marginal cost of producing the fifth unit of output is higher than the marginal cost of producing the fourth unit of output, then at five units of output, average total cost must be rising.

Table 13-19 -Refer to Table 13-19. What is the average fixed cost of producing 430 units of output?

Which of the following is not a property of a firm's cost curves?

Table 13-9 -Refer to Table 13-9. For the firm whose production function and costs are specified in the table, its total-cost curve is

Diminishing marginal product exists when the production function becomes flatter as inputs increase.

Table 13-16 Listed in the table are the long-run total costs for three different firms. -Refer to Table 13-16. Which firm is experiencing diseconomies of scale?

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. In the long run, the firm can operate on which of the following average total cost curves?

A firm's total profit equals its marginal revenue minus its marginal cost.

In the long run a company that produces and sells covers for cell phones incurs total costs of $2,500 when output is 1,250 covers and $4,000 when output is 1,500 covers. For this range of output, the cell phone cover company exhibits