Exam 8: Costs and the Supply of Goods

Use the figure to answer the following question(s). Figure 8-4 According to Figure 8-4, at what output would a properly constructed marginal cost curve cross the ATC curve?

The law of diminishing returns indicates why

A disadvantage of team production compared to contracting out is that

The implicit rate of return that must be paid to induce investors to continue to supply the funds necessary to maintain a firm's capital assets is called

Use the figure to answer the following question(s). Figure 8-2 Using Figure 8-2, calculate the firm's total cost of producing 20 units of output.

For a firm that wants to remain in business, which of the following costs could be avoided if it halted current production?

Sally leaves her $34,000 secretarial position and invests her savings of $15,000 (on which she was earning 6 percent interest) to start her own agency. After expenses, her net income was $38,900. Her economic profit was

Use the figure to answer the following question(s). Figure 8-3 According to Figure 8-3, at what output would a properly constructed marginal cost curve cross the ATC curve?

An activity known as shirking is least likely to occur when

Which of the following explains why business owners have a strong incentive to strive for operational efficiency?

In 1632, the Virginia Legislature decreed that all love apples must be sold for $1 per bushel (no more, no less). At the time, Mr. McKintoch had 1,000 bushels of love apples ready for harvesting. His sunk costs were $1,100, and his total costs (including sunk costs) would have been $1,800 if he harvested. If McKintoch decided not to harvest because he did not think he could cover his total costs, he