Exam 13: The Costs of Production

Suppose a firm currently produces 325 units of output per day with 15 workers. The firm is able to produce 340 units of output with a 16th worker. What is the marginal product of the 16th worker?

The minimum points of the average variable cost and average total cost curves occur where the

The Carolina Christmas Tree Corporation grows and sells 500 Christmas trees. The average cost of production per tree is $50. Each tree sells for a price of $65. The Carolina Christmas Tree Corporation's total revenues are

The efficient scale of the firm is the quantity of output that

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 constant returns to scale?

Table 13-18 -Refer to Table 13-18. What is the shape of the average-fixed-cost curve?

As a firm moves along its long-run average cost curve, it is adjusting the size of its factory to the quantity of production.

Scenario 13-5 Suppose that Emily opens a restaurant. She receives a loan from a bank for $200,000. She withdraws $100,000 from her personal savings account. The interest rate on the loan is 6%, and the interest rate on her savings account is 2%. -Refer to Scenario 13-5. Emily's annual implicit cost of capital is

Suppose that a firm has only one variable input, labor, and firm output is zero when labor is zero. When the firm hires 6 workers the firm produces 90 units of output. Fixed costs of production are $6 and the variable cost per unit of labor is $10. The marginal product of the seventh unit of labor is 4. Given this information, what is the average variable cost of production when the firm hires 7 workers?

The use of specialization to achieve economies of scale is one reason modern societies are as prosperous as they are.

A total-cost curve shows the relationship between the

In the short run, a firm that produces and sells house paint can adjust

Figure 13-10 -Refer to Figure 13-10. The firm experiences constant returns to scale if it changes its level of output from

The marginal product of any input is the

When adding another unit of labor leads to an increase in output that is smaller than the increases in output that resulted from adding previous units of labor, the firm is experiencing

What might cause economies of scale?

Scenario 13-4 Suppose that Abdul opens a coffee shop. He receives a loan from a bank for $100,000. He withdraws $50,000 from his personal savings account. The interest rate on the loan is 8%, and the interest rate on his savings account is 2%. -Refer to Scenario 13-4. Abdul's annual implicit cost of capital is

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. Quantity B represents the output level where the firm

Suppose that for a particular business there are no implicit costs. Then

Larry's Lunchcart is a small street vendor business. If Larry makes 15 pretzels in his first hour of business and incurs a total cost of $16.50, his average total cost per pretzel is