Exam 7: Production Costs

Exhibit 7-15 Long-run average cost If the firm represented in Exhibit 7-15 is operating with a plant whose size corresponds to short-run average total cost curve A, the level of output that would minimize its short-run average total cost is:

Suppose the marginal product is maximized when the 10th worker is hired. Then the marginal cost value is minimized when

Exhibit 7-12 Cost schedule for producing pizza In Exhibit 7-12, the marginal cost of producing the 3rd pizza

Exhibit 7-6 Total cost curves In Exhibit 7-6, the total fixed cost is:

Which statement about the total variable cost curve is true ?

Exhibit 7-15 Long-run average cost In Exhibit 7-15, short-run average total cost, short-run marginal cost, and long-run average cost are all equal at which level of output per week?

American Airlines makes numerous nonstop flights from Chicago's O'Hare Airport to the airport at Dallas-Fort Worth. The distance between those two cities is 1,000 miles. The only variable cost, fuel, costs $.06 for each passenger-mile it flies. Bob, on his way to an emergency business meeting, buys a ticket in coach class for $1,300 at the very last minute. The marginal cost of flying Bob from Chicago to Dallas-Fort Worth is:

Exhibit 7-1 Production of pizza data Exhibit 7-1 shows the change in the production of pizzas as more workers are hired. The marginal product of the second employee equals:

Marginal product measures the change in:

Two friends, Diane and Sam, own and run a bar. Diane tends bar on Monday, Wednesday, and Friday and receives a wage in addition to tips. Sam tends bar on Tuesday, Thursday, and Saturday and receives only tips. Which of the following represents an implicit cost of operating the bar?

A young chef is considering opening his own sushi bar. To do so, he would have to quit his current job, which pays $20,000 a year, and take over a store building that he owns and currently rents to his brother for $6,000 a year. His expenses at the sushi bar would be $50,000, for food and $2,000 for gas and electricity. What is the sum of his implicit costs?

Monetary payments to nonowners of a firm are called:

Which of the following is true at the point where diminishing returns set in?

Exhibit 7-11 Short-run cost schedule for pizzeria's hourly production In Exhibit 7-11, the average total cost or producing 40 pizzas per hour is equal to:

Which of the following statements is true ?

The long run is a period of:

Exhibit 7-3 A marginal product curve As shown in Exhibit 7-3, the law of diminishing returns applies where there are:

Suppose that a small business takes in monthly revenue of $100,000. Labor, rental, energy, and other purchased input costs are $70,000. The owner/entrepreneur could earn $5,000 per month in another job, and the owner/entrepreneur could get a return of $5,000 each month if she sold her business and invested the net proceeds in a financial asset, such as a treasury bond. Which of the following correctly describes her monthly economic profit?

If total cost is $1,000 when output is zero, and total cost is $1,200 when output is one, and total cost is $1,500 when output is two, then which of the following is true ?

Constant returns to scale cause the long-run average cost curve to be: