Exam 7: Production Costs

During the course of a week, McDonald's has enough time to hire or layoff workers, but it does not have enough time to expand its kitchen or add an additional seating area. In this situation, McDonald's:

Exhibit 7-13 Cost curves In Exhibit 7-13, ATC is shown by the graph labeled:

Exhibit 7-14 Cost curves In Exhibit 7-14, the U-shaped LRAC curve indicates which of the following as quantity increases from 0 to 4,000?

Use the table below to answer the following question. What is the average total cost at an output level of four units?

Economies of scale are created by greater efficiency of capital and by:

In the long run, firms in many industries often experience a falling average total cost curve as a result of:

Variable inputs are defined as any resource that:

As a fishing firm hires its first, second, and third workers, it could find that marginal product actually rises. The reason for this is:

Suppose the fixed cost of building a nuclear power plant is $1 billion. Suppose also that the only variable cost is the labor of Homer Simpson, and he earns $10 per hour. If the plant generates 1,000 kilowatts each hour, and has already generated 1 billion kilowatts, what can you say about the marginal cost of the next kilowatt?

Sam quits his job as an airline pilot and opens his own pilot training school. He was earning $40,000 as a pilot. He withdraws $10,000 from his savings where he was earning 6 percent interest and uses the money in his new business. He uses a building he owns as a hanger and could rent it out for $5,000 per year. He rents a computer for $1,200, buys office supplies for $500, rents an airplane for $6,000, pays $1,300 for fuel and maintenance, and hires one worker for $30,000. Sam's total revenue from pilot training classes this year equaled $90,400. Sam's accounting profit this year equals:

Exhibit 7-9 Cost schedule for firm X As shown in Exhibit 7-9, the total cost of producing 4 units is:

Bill is an accountant for a small machine shop. His boss has asked him to calculate the shop's total fixed cost. Which method will get Bill the correct answer?

A farm is able to produce 5,000 bushels of peaches per season on 100 acres. Assume it adds one more acre and is able to produce 6,000 bushels per season. The marginal product of the additional acre of land for this farm is:

The opportunity costs associated with the use of resources owned by a firm are:

Which of the following is true about average fixed cost?

When the marginal cost is higher than the average total cost,

A firm's opportunity cost of using resources provided by the firm's owners is called:

When costs that vary with the level of output are divided by the output, you have calculated:

Exhibit 7-11 Short-run cost schedule for pizzeria's hourly production In Exhibit 7-11, the marginal cost curve crosses the average total cost curve at

Exhibit 7-15 Long-run average cost In Exhibit 7-15, economies of scale exist up to: