Exam 13: The Costs of Production

​Sebastian decides to open a tree farm. When deciding to open his own business, he turned down two separate job offers of $25,000 and $30,000 and withdrew $20,000 from his savings. Sebastian's savings account paid 3 percent interest. He also borrowed $20,000 from his brother, whom he pays 2 percent interest per year. He spent $15,000 to purchase supplies and earned $50,000 in revenue during his first year. What are Sebastian's implicit costs from running his own business?

Average total cost (ATC) is calculated as follows:

Table 13-12 Eileen's Elegant Earrings produces pairs of earrings for its mail order catalogue business. Each pair is shipped in a separate box. She rents a small room for $150 a week in the downtown business district that serves as her factory. She can hire workers for $275 a week. There are no implicit costs. -Refer to Table 13-12. Eileen has received an order for 3,000 boxes of earrings for next week. If she expects that the trend in the marginal product of labor will continue in the same direction, it is most likely that her best decision will be to

Figure 13-7 -Refer to Figure 13-7. Which of the figures represents the production function for a typical firm?

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

Consider the following information about baseball production at Bobby's Baseball Factory: Bobby pays all his workers the same wage, and labor is his only variable cost. From this information we can conclude that Bobby's average variable cost decreases

Which field of economics studies how the number of firms affects the prices in a market and the efficiency of market outcomes?

If Kevin's children run a lemonade stand for a day and sell 200 glasses of lemonade at $0.50 each, their total revenues are

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

Table 13-19 -Refer to Table 13-19. What is the shape of the marginal-cost curve?

Figure 13-5 -Refer to Figure 13-5. Curve D is increasing because

When a firm's long-run average total costs do not vary as output increases, the firm exhibits

The field of industrial organization addresses how the number of firms affects prices in a market and the efficiency of the market outcome.

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

Table 13-11 -Refer to Table 13-11. What is the marginal cost of producing the 1st poster?

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. Which of the following statements is (are) true? (i)Farmer Jack experiences decreasing marginal product. (ii)Farmer Jack's production function is nonlinear. (iii)Farmer Jack's total cost curve is linear.

Variable cost divided by quantity produced is

Figure 13-6 -Refer to Figure 13-6. Why doesn't the total cost curve begin at the origin (the point 0,0)?

The average fixed cost curve

If a firm experiences constant returns to scale at all output levels, then its long-run average total cost curve would