Exam 13: The Costs of Production

Scenario 13-22 Suppose that a small hair styling salon had revenues of $150,000 in a given year. The owner spent $10,000 on utilities, $60,000 on supplies (shampoo, conditioner, hair coloring and other chemicals, etc.), and $50,000 on equipment (mirrors, chairs, scissors, curling irons, etc.), including maintenance. The owner could have earned $50,000 working at another salon. -Refer to Scenario 13-22. What is the accounting profit for the hair styling salon?

Diminishing marginal product suggests that

Which of the following costs of publishing a book is a fixed cost?

Economists in the field of industrial organization study how

Table 13-5 -Refer to Table 13-5. The marginal product of the third worker is

Economic profit is greater than or equal to accounting profit.

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?

Table 13-15 -Refer to Table 13-15. What is average fixed cost when output is 40 units?

-Refer to Table 13-4. What is the marginal product of the second worker?

Which of the following costs do not vary with the amount of output a firm produces?

DIFFICULTY: Figure 13-8 -Refer to Figure 13-8. Which of the following statements is correct?

Some costs do not vary with the quantity of output produced. Those costs are called

Which of the following is an example of an implicit cost?

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. Farmer Jack's marginal cost (i)curve is U-shaped. (ii)decreases with increased watermelon output. (iii)reflects diminishing marginal product.

​​​Table 13-7 -Refer to Table 13-7. ​What is the marginal product of the third worker?

When economists speak of a firm's costs, they are usually excluding the opportunity costs.

Thirsty Thelma owns and operates a small lemonade stand. When Thelma is producing a low quantity of lemonade she has few workers and her equipment is not being fully utilized. Because she can easily put her idle resources to use,

Accounting profit is equal to

Table 13-19 -Refer to Table 13-19. What is the average variable cost of producing 400 units of output?

Firms may experience diseconomies of scale when