Exam 13: The Costs of Production

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 explicit cost of capital is

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?

Table 13-11 -Refer to Table 13-11. The total cost of producing 1 poster is

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

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

If long-run average total cost is rising, then the firm is experiencing economies of scale.

Table 13-11 -Refer to Table 13-11. The marginal cost of producing the 6th poster is

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. At levels of output less than M, the firm experiences

Table 13-14 -Refer to Table 13-14. What is the average variable cost of producing 3 units of output?

Table 13-2 -Refer to Table 13-2. What is the marginal product of the fourth worker?

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

The opportunity cost of capital is an implicit cost almost every business incurs.

The marginal-cost curve intersects the average-total-cost curve at the minimum point of the average-total-cost curve.

A production function is a relationship between inputs and

Table 13-15 -Refer to Table 13-15. What is variable cost when output equals 30 units?

Table 13-14 -Refer to Table 13-14. What is the total cost of producing 7 units of output?

Scenario 13-7 Julia prepares tax returns and does bookkeeping. Last year her revenues from the tax and bookkeeping business were $150,000, and her expenses for the business were $15,000. When she started her tax and bookkeeping business, Julia gave up her supplemental job doing in-home pet sitting. She used to earn $10,000 per year from pet sitting. Assume that she incurred no costs for her pet sitting business. -Refer to Scenario 13-7. Julia's explicit costs are

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?

Anya has decided to start her own hair-styling salon. To purchase the necessary equipment, Anya withdrew $10,000 from her savings account, which was earning 3% interest, and borrowed an additional $5,000 from the bank at an interest rate of 8%. What is Anya's annual opportunity cost of the financial capital that has been invested in the business?

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?