Exam 7: Production Costs

Barbara owns a small shop where dresses are made. At the end of a given month, she has 250 dresses. Her expenses for the month are $1,000 for rent, $6,000 for wages, $1,500 for fabric and thread, and $500 for electricity. Her total variable costs for the month are:

If the minimum points of all the possible short-run average total cost curves become successively lower as quantity of output increases, then:

A firm estimates that when output is 10, its total costs are $900. It also finds that when output is 11, its total costs are $920. The marginal cost of the eleventh unit of output is:

A downward-sloping portion of a long-run average total cost curve is the result of:

Which of the following represents the key difference between the short run and the long run?

Exhibit 7-4 A marginal product curve As shown in Exhibit 7-4, the law of diminishing returns applies in the range of:

Which of the following would be considered an implicit cost?

Exhibit 7-16 Long-run average cost curves In Exhibit 7-16, which firm's long-run average cost curve experiences constant returns to scale between 2 and 5 units?

The minimum point on the marginal cost curve corresponds to the:

Distinguish economies and diseconomies of scale. How can the extent to which economies and diseconomies of scale explain the size and number of real world firms in an industry?

If a firm enlarges its factory size and realizes higher average costs of production then:

Exhibit 7-2 Cost schedule for pizza production Exhibit 7-2 shows the labor, energy, and materials cost of making various quantities of pizzas. The table shows that the labor cost of making pizzas will:

Exhibit 7-5 Workers and output data In Exhibit 7-5, diminishing returns set in when the ____ worker is hired.

Suppose a publisher faces the following costs of producing 10,000 newspapers each month: $5,500 cost of labor; $2,200 monthly mortgage payment; $250 cost of electricity to run the printing presses; $800 for ink and paper; and $200 in city property taxes (based on the value of the building and land). Its total variable costs are:

When the curve that envelops the series of possible short-run average total cost curves is horizontal, this means that there are:

The short run is a period of time:

Exhibit 7-9 Cost schedule for firm X As shown in Exhibit 7-9, the average total cost of producing 5 units is:

Exhibit 7-16 Long-run average cost curves Which firm in Exhibit 7-16 displays a long-run average cost curve with economies of scale throughout the range of output shown?

Diseconomies of scale exist for all of the following reasons except :

If the marginal cost of the 10th unit of output is $15 and the average total cost of the 10th unit of output is $15,