Exam 13: The Costs of Production

Frank owns a dog-grooming business. Which of the following costs would be implicit costs? (i) Dog shampoo (ii) Rent on the storefront (iii) Wages Frank could earn as a substitute elementary-school teacher (iv) Interest that Frank's money was earning before he spent his savings to set up the dog-grooming business

Table 13-17 Consider the following table of long-run total cost for four different firms: -Refer to Table 13-17. Which firm has diseconomies of scale over the entire range of output?

Scenario 13-9 Ellie has been working for an engineering firm and earning an annual salary of $80,000. She decides to open her own engineering business. Her annual expenses will include $15,000 for office rent, $3,000 for equipment rental, $1,000 for supplies, $1,200 for utilities, and a $35,000 salary for a secretary/bookkeeper. Ellie will cover her start-up expenses by cashing in a $20,000 certificate of deposit on which she was earning annual interest of $500. -Refer to Scenario 13-9. Ellie's annual economic costs will equal

Economies of scale occur when a firm's

If the total cost curve gets steeper as output increases, the firm is experiencing

Explicit costs

Figure 13-7 -Refer to Figure 13-7. Which of the figures represents the total cost curve for a typical firm?

Diseconomies of scale often arise because higher production levels allow specialization among workers.

Table 13-1 -Refer to Table 13-1. What is total output when 5 workers are hired?

Which of the following statements is correct?

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

Scenario 13-9 Ellie has been working for an engineering firm and earning an annual salary of $80,000. She decides to open her own engineering business. Her annual expenses will include $15,000 for office rent, $3,000 for equipment rental, $1,000 for supplies, $1,200 for utilities, and a $35,000 salary for a secretary/bookkeeper. Ellie will cover her start-up expenses by cashing in a $20,000 certificate of deposit on which she was earning annual interest of $500. -Refer to Scenario 13-9. According to an economist, which of the following revenue totals will yield Ellie's business $50,000 in economic profits?

Bubba is a shrimp fisherman who catches 4,000 pounds of shrimp per year. He can sell the shrimp for $5 per pound. His average total cost of catching shrimp is $3 per pound. Bubba's annual total revenue is

The long-run average total cost curve is always

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

Briefly describe why measuring a firm's costs is more complicated than measuring its revenues.

Which of the following statements is not correct?

Average variable cost is equal to total variable cost divided by quantity of output.

The amount by which total cost rises when the firm produces one additional unit of output is called

The shape of the marginal cost curve tells a producer something about the marginal product of her workers.