Exam 13: The Costs of Production.

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

Economies of scale occur when a firm's

Profit is defined as total revenue

Scenario 13-6 Tony is a wheat farmer, but he also spends part of his day teaching guitar lessons. Due to the popularity of his local country western band, Farmer Tony has more students requesting lessons than he has time for if he is to also maintain his farming business. Farmer Tony charges $25 an hour for his guitar lessons. One spring day, he spends 10 hours in his fields planting $130 worth of seeds on his farm. He expects that the seeds he planted will yield $300 worth of wheat. -Refer to Scenario 13-6.Tony's accountant would calculate the total cost of his farming to equal

If the marginal cost of producing the fifth unit of output is higher than the marginal cost of producing the fourth unit of output,then at five units of output,average total cost must be rising.

In setting the production level,a firm's cost curves

Scenario 13-17 Suppose that a given firm experiences decreasing marginal product of labor with the addition of each worker regardless of the current output level. -Refer to Scenario 13-17.Average fixed cost will be

Table 13-16 Listed in the table are the long-run total costs for three different firms. -Refer to Table 13-16.Firm B is experiencing diseconomies of scale.

A total-cost curve shows the relationship between the

Scenario 13-12 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 13-12.Farmer Brown's production function exhibits

Table 13-15 Consider the following table of long-run total cost for four different firms: -Refer to Table 13-13.Which firm has economies of scale over the entire range of output?

When average cost is greater than marginal cost,marginal cost must be

Table 13-10 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 13-10.During the week of July 4th,Eileen doesn't produce any earrings.What are her costs during the week?

Since the 1980s,Wal-Mart stores have appeared in almost every community in America.Wal-Mart buys its goods in large quantities and,therefore,at cheaper prices.Wal-Mart also locates its stores where land prices are low,usually outside of the community business district.Many customers shop at Wal-Mart because of low prices.Local retailers,like the neighborhood drug store,often go out of business because they lose customers.This story demonstrates that

Figure 13-4 -Refer to Figure 13-4.Which of the above marginal cost curves reflects diminishing marginal product?

Scenario 13-5 Suppose that Emily opens a restaurant. She receives a loan from a bank for $200,000. She withdraws $100,000 from her personal savings account. The interest rate on the loan is 6%, and the interest rate on her savings account is 2%. -Refer to Scenario 13-5.Emily's total opportunity cost of capital is

When adding another unit of labor leads to an increase in output that is smaller than the increases in output that resulted from adding previous units of labor,the firm is experiencing

The cost of producing the typical unit of output is the firm's

Average total cost and marginal cost express information that is already contained in a firm's total cost.

The Wacky Widget company has total fixed costs of $100,000 per year.The firm's average variable cost is $10 for 10,000 widgets.At that level of output,the firm's average total costs equal