Exam 13: The Costs of Production

Mosti, a materials engineer, has discovered a groundbreaking new way to make recycled plastic stronger.He is looking to exploit this discovery by starting up his own business at a cost of $500 000.Unfortunately Mosti has only $200 000 in savings and must borrow the other $300 000.If the interest rate is 10%, then what, according to an economist, is the opportunity cost of starting up the business?

Graph 13-2 This graph depicts a total cost function for a firm that produces cookies.Use the graph to answer the following question(s). -Refer to Graph 13-2.The changing slope of the total cost curve reflects:

Average total cost equals:

Those things that must be forgone to acquire a good are called:

Specialisation among workers occurs when:

Graph 13-5 The set of curves above reflect information about the cost structure of a firm.Use this graph to answer the following question(s). -Refer to Graph 13-5.Which of the curves is most likely to represent average fixed cost?

Diminishing marginal product occurs:

The amount of money that a firm receives from the sale of its output is called:

Graph 13-6 This graph depicts average total cost functions for a firm that produces automobiles.Use the graph to answer the following question(s). -Refer to Graph 13-6.At levels of output below point M, the firm experiences:

The marginal cost curve will intersect:

If a firm mothballs a factory so that its output is zero, which of the following costs will also be zero?

From a firm's costs perspective, the long run is:

Costs that have already been incurred and are non-recoverable should be included in marginal cost calculations.

Constant returns to scale occur when:

Suppose a firm produced 200 units of output but sold only 150 of the units it produced.The average cost of production for each unit of output produced was $80.Each of the 150 units were sold for a price of $50.The total revenue of this firm would be:

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

In some cases, specialisation allows larger factories to produce goods at a lower average cost than smaller factories.

The efficient scale of the firm is the quantity of output that:

The time it takes for a firm to reach the long run depends on the firm and the products it makes.

Accounting profit and economic profit are two ways to say the same thing.