Exam 13: The Costs of Production

Jane was a partner at a law firm earning $223,000 per year. She left the firm to open her own law practice. In the first year of business she generated revenues of $347,000 and incurred explicit costs of $163,000. Jane's economic profit from her first year in her own practice is

Figure 13-3 -Refer to Figure 13-3. The graph illustrates a typical total cost curve. Based on its shape, what does the corresponding production function look like?

Table 13-11 -Refer to Table 13-11. What is the marginal cost of producing the 1st poster?

Table 13-5 -Refer to Table 13-5. Diminishing marginal product begins with the addition of the

Figure 13-3 -Refer to Figure 13-3. The graph illustrates a typical

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 constant returns to scale.

Table 13-18 -Refer to Table 13-18. What is the shape of the firm's total-cost curve?

Sonia opened a yoga studio where she teaches classes and sells yoga clothing. Fixed costs for Sonia's yoga studio include the cost of the (i) Tank tops. (ii) Wages paid to the other yoga instructors. (iii) Lease on the studio space.(iv) Insurance that the landlord requires Sonia to carry for the studio.

Table 13-14 -Refer to Table 13-14. What is the variable cost of producing 5 units of output?

Table 13-14 -Refer to Table 13-14. What is the variable cost of producing 8 units of output?

A second or third worker may have a higher marginal product than the first worker in certain circumstances.

Shelley's Salsa produces and sells organic salsa. Last year it sold 3 million tubs of salsa at a price of $3 per tub. For last year, the firm's

Table 13-6 Wooden Chair Factory -Refer to Table 13-6. Assume the Wooden Chair Factory currently employs 5 workers. What is the marginal product of labor when the factory adds a 6th worker?

Stick Storage manufactures and sells computer flash drives. Last year it sold 2 million flash drives at a price of $10 each. For last year, the firm's

The marginal product of labor can be defined as the change in

Table 13-4 Charles's Math Tutoring -Refer to Table 13-4. Suppose that Charles's math tutoring company has a fixed cost of $50 per month for his cell phone. Each worker costs Charles $60 per day. As output increases from 45 to 70 students, Charles's total cost curve

Table 13-6 Wooden Chair Factory -Refer to Table 13-6. Each worker at the Wooden Chair Factory costs $12 per hour. The cost of each machine is $20 per day regardless of the number of chairs produced. If the factory produces at a rate of 35 chairs per hour, what is the total labor cost per hour?

Figure 1 b. Figure 2 c. Figure 3 d. Figure 4 ANSWER: d DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.174 - Given a graph of the production function and input costs, derive the firm's total-cost curve. TOPICS: Producer theory Production function KEYWORDS: BLOOM'S: Comprehension CUSTOM ID: 178.13.3 - MC - MANK08 Figure 13-8 -Refer to Figure 13-8. The efficient scale of production occurs at which quantity?

Marginal cost tells us the

Describe how an accounting firm could experience economies of scale.