Exam 13: The Costs of Production

Scenario 13-16 Barney builds custom wooden birdhouses. He can make 150 birdhouses per month and sell them for $50 each. His average total cost is $30 per birdhouse. -Refer to Scenario 13-16. Barney is considering hiring his best friend Fred to work for him. Fred can build 125 birdhouses per month. If Barney hires Fred, what will be the monthly total output of his birdhouse business?

Table 13-6 Wooden Chair Factory -Refer to Table 13-6. Assume the Wooden Chair Factory currently employs 2 workers. What is the marginal product of labor when the factory adds a 3rd worker?

Industrial organization is the study of

Figure 13-5 -Refer to Figure 13-5. Curve A represents which type of cost curve?

The amount of money that a firm receives from the sale of its output is called

Average total cost and marginal cost express information that is already contained in a firm's total cost.

When average total cost is above marginal cost, average total cost is rising.

Trevor's Tire Company produced and sold 500 tires. The average cost of production per tire was $50. Each tire sold for a price of $65. Trevor's Tire Company's total profits are

Average total cost reveals how much total cost will change as the firm alters its level of production.

Total revenue equals

A firm produces 400 units of output at a total cost of $1,200. If total variable costs are $1,000,

Table 13-18 -Refer to Table 13-18. What is the average fixed cost of producing 450 units of output?

What effect, if any, does diminishing marginal product have on the shape of the marginal cost curve?

Scenario 13-6 Ziva is an organic lettuce farmer, but she also spends part of her day as a professional organizing consultant. As a consultant, Ziva helps people organize their houses. Due to the popularity of her home-organization services, Farmer Ziva has more clients requesting her services than she has time to help if she maintains her farming business. Farmer Ziva charges $25 an hour for her home-organization services. One spring day, Ziva spends 10 hours in her fields planting $130 worth of seeds on her farm. She expects that the seeds she planted will yield $300 worth of lettuce. -Refer to Scenario 13-6. Ziva's accounting profit from farming equals

Which of the following measures of cost is best described as "the cost of a typical unit of output if total cost is divided evenly over all the units produced?"

The total cost to the firm of producing zero units of output is

The fundamental reason that marginal cost eventually rises as output increases is because of

Scenario 13-19 Doreen's Dairy produces and sells Swiss cheese. Last year, it produced 7,000 pounds and sold each pound for $6. In producing the 7,000 pounds, the dairy incurred variable costs of $28,000 and a total cost of $40,000. -Refer to Scenario 13-19. In producing the 7,000 pounds of cheese, the firm's average total cost was

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

Scenario 13-18 Farmer Jack is a watermelon farmer. If Jack plants no seeds on his farm, he gets no harvest. If he plants 1 bag of seeds, he gets 30 watermelons. If he plants 2 bags of seeds, he gets 50 watermelons. If he plants 3 bags of seeds he gets 60 watermelons. A bag of seeds costs $100, and the costs of seeds are his only costs. -Refer to Scenario 13-18. What is the shape of Farmer Jack's marginal cost curve?