Exam 13: The Costs of Production

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

Graph 13-1 This graph depicts a production function for a firm that produces cookies.Use the graph to answer the following question(s). -Refer to Graph 13-1.The slope of the total product curve reveals information about the:

Table 13-2 Adrienne's Premium Boxing Service subcontracts with a chocolate manufacturer to box premium chocolates for their mail order catalogue business.Adrienne 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.Costs are in dollars per week. -Refer to Table 13-2.Adrienne has received an order for 3000 boxes of chocolates for next week.If she expects that the trend in the marginal product of labour will continue in the same direction, it is most likely that her best decision will be to:

If a firm wants to capitalise on economies of scale, it may be able to do so by:

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.Which of the statements below is most consistent with the shape of the total cost curve?

The shape of the total cost curve is unrelated to the shape of the production function.

Accountants keep track of the money that flows into and out of firms.

Average total cost necessarily rises due to which of the following? (i) rising marginal cost (ii) increasing marginal product (iii) decreasing marginal cost

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.In the long run, the firm can operate on which of the following average total cost curves?

Define the Law of Diminishing returns:

Which of the following is an implicit cost? (i) a business owner forgoing an opportunity to earn a large salary working for a Wall Street brokerage firm (ii) interest on debt (iii) uncollected revenue

According to the information provided, Amy's accounting profit equals:

Economists are primarily interested in:

At all levels of production beyond the point where the marginal cost curve crosses the average variable cost curve, average variable cost:

Diminishing marginal product exists when the production function becomes flatter as inputs increase.

Which of the following is equivalent to economic profit? (i) total revenue less explicit costs and less implicit costs (ii) total revenue less opportunity costs (iii) accounting profit

If the total cost curve becomes flatter as output increases, then this reveals diminishing marginal product.

Diminishing marginal product of labour means:

Several related measures of cost can be derived from a firm's total cost.

Table 13-1 Measures of Cost for Splashy Cardboard Kayak Factory. -Refer to Table 13-1.The average fixed cost of producing five kayaks is: