Exam 13: The Costs of Production

Table 13-7 The following table shows the production costs for The Flying Elvis Copter Rides. ​ ​ Output (Helicopter rides) Total Cost (Dollars) Fixed Cost (Dollars) Variable Cost (Dollars) Marginal Cost (Dollars) Average Fixed Cost (Dollars per ride) Average Variable Cost (Dollars per ride) Avera Total Cost (Dollars ride) 0 50 50 0 -- - - - 1 150 2 120 3 120 ​ ​ ​ ​ -Refer to Table 13-7. What is the value of A?

Table 13-8 ​ ​ Output (Units) Fixed Cost (Dollars) Variable Cost (Dollars) 0 20 0 1 20 10 2 20 40 3 20 80 4 20 130 5 20 200 6 20 300 -Refer to Table 13-8. What is the average variable cost of producing 5 units of output?

Table 13-13 Listed in the table are the long-run total costs for three different firms. uantity Firm A 100 100 100 100 100 Firm B 100 200 300 400 500 Firm C 100 300 600 1,000 1,500 -Refer to Table 13-13. Firm B is experiencing constant returns to scale.

Suppose that a "doggie day care" firm uses only two inputs: hourly workers (labor) and a building (capital). In the short run, the firm most likely considers

Jane was a partner at a law firm earning $223,000 per year. She left the firm to open her own law practice. In the first year of business she generated revenues of $347,000 and incurred explicit costs of $163,000. Jane's economic profit from her first year in her own practice is

Table 13-14 Labor Output Marginal Product Variable Cost Fixed Cost 0 0 - \ 0 \ 10 1 200 200 \ 20 \ 10 2 350 \ 40 \ 10 3 450 \ 60 \ 10 4 50 \ 80 \ 10 5 25 \ 100 \ 10 6 530 \ 120 \ 10 -Refer to Table 13-14. What is the total output of five workers?

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

In the long run, a factory is usually considered a fixed input.

Scenario 13-4 If Farmer Brown plants no seeds on his farm, he gets no harvest. If he plants 1 bag of seeds, he gets 5 bushels of wheat. If he plants 2 bags, he gets 9 bushels. If he plants 3 bags, he gets 12 bushels. A bag of seeds costs $120, and seeds are his only cost. -Refer to Scenario 13-4. Farmer Brown's total-cost curve is

When a firm experiences economies of scale, long-run average total cost falls as the quantity of output increases.

The average-total-cost curve reflects the shape of both the average-fixed-cost and average-variable-cost curves.

Table 13-14 Labor Output Marginal Product Variable Cost Fixed Cost 0 0 - \ 0 \ 10 1 200 200 \ 20 \ 10 2 350 \ 40 \ 10 3 450 \ 60 \ 10 4 50 \ 80 \ 10 5 25 \ 100 \ 10 6 530 \ 120 \ 10 -Refer to Table 13-14. What is the marginal product of the third worker?

Figure 13-2 ​ -Refer to Figure 13-2. Curve B is increasing because

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

When a firm experiences economies of scale,

Ren's Tent Company has total fixed costs of $300,000 per year. The firm's average variable cost is $120 for 10,000 tents. At that level of output, the firm's average total costs equal

Accounting profit is greater than or equal to economic profit.

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

Table 13-9 ​ ​ Labor (Number of w orkers) Output (Units) Fixed Cost (Dollars) Variable Cost (Dollars) 0 0 30 0 1 100 30 15 2 180 30 30 3 240 30 45 4 280 30 60 5 300 30 75 -Refer to Table 13-9. What is the marginal product of the third worker?

Table 13-3 ​ ​ Labor (Number of workers) Output (Units) Fixed Cost (Dollars) Variable Cost (Dollars) Total Cost (Dollars) 0 0 50 0 50 1 90 50 20 70 2 170 50 40 90 3 230 50 60 110 4 240 50 80 130 ​ ​ ​ -Refer to Table 13-3. At which number of workers does diminishing marginal product begin?