Exam 13: The Costs of Production

A firm produces 60 units of output with 5 workers, 65 units with 6 workers, and 68 units with 7 workers. The firm's production function exhibits diminishing marginal productivity between 5 and 7 workers. ​

Scenario 13-21 Suppose that a small family farm sold its output for $100,000 in a given year. The family spent $25,000 on fuel, $40,000 on seed, fertilizer, and pesticides, and $25,000 on equipment, including maintenance. The family members could have earned $20,000 working at other occupations. -Refer to Scenario 13-21. What is the accounting profit for the family farm?

Diminishing marginal productivity implies decreasing total product.

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

How long does it take a firm to go from the short run to the long run?

The production function depicts a relationship between which two variables? Also, draw a production function that exhibits diminishing marginal product.

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 70 chairs per hour and operates 8 hours per day, what is the factory's total labor cost per day?

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

Implicit costs

Table 13-14 -Refer to Table 13-14. What is the total cost of producing 2 units of output?

Profit is defined as

The average-fixed-cost curve is always declining. How does this affect the relationship between the AVC and ATC curves?

In the long run a company that produces and sells covers for cell phones incurs total costs of $2,500 when output is 1,250 covers and $4,000 when output is 1,500 covers. For this range of output, the cell phone cover company exhibits

​Tony's Taco Truck has an average variable cost of $1.50 and a marginal cost of $2 when it produces 50 units of output (tacos). We can conclude that the average variable cost of producing 51 tacos is

Average total cost tells us the

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

Average total cost is increasing whenever

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

​Table 13-16 -Refer to Table 13-16. What is the fixed cost of producing 0 units of output?​

Marginal cost equals (i)change in total cost divided by change in quantity produced. (ii)change in variable cost divided by change in quantity produced. (iii)the average fixed cost of the current unit.