Exam 8: Production Costs

Mackenzie wants to produce more pies. If she rents another oven for $100, she can make another 200 pies. If she hires another worker at a wage of $15, she can make another 45 pies. What statement is true based on this information?

Alex's total fixed cost to mow 10 lawns is $500. If he spends $400 on gas, labor, and other costs that change when quantity changes, what is his average total cost of producing 10 mown lawns?

Use the table Workers and Buns Produced. How many buns are produced when four workers are hired? ​

As the marginal product of labor _____, it takes a _____ increase in the quantity of labor to produce another unit of output, which makes marginal cost increase.

A negative profit is called:

A year ago, Elizabeth purchased a new computer for $1,400, but now it needs $500 in repairs. She will get only $400 in additional value over the next year. What is Elizabeth's best course of action, and why it is the best?

There are NO fixed inputs in:

Which of the following is used to show the relationship between the amount of inputs that a firm uses and the quantity that is produced?

In the long run, when a firm is producing a level of output that corresponds to the minimum point of the average total cost curve, the firm is said to be operating:

An airline finds itself with so many potential customers that all of its flights sell out. It decides to offer more flights around the clock with its existing fleet. Which of the following is NOT example of a variable cost of offering more flights?

Is a firm's accounting profit usually more than, less than, or equal to its economic profit? Explain.

Use the table Workers and Buns Produced. At what quantity of workers is the marginal product the greatest? ​

A production function is a relationship that shows the:

(Use Figure: Burgin's Cost Curves) Use the figure Burgin's Cost Curve. Burgin drew the marginal cost curve and average cost curve for a firm on his homework as shown in this figure. What mistake did Burgin make? ​ Figure: Burgin's Cost Curves

Mallory's Marble Shop received $110,000 from customers last year and had explicit costs of $30,000 and implicit costs of $70,000. What was Mallory's Marble Shop's accounting profit?

An input that cannot be changed in the short run is a:

A firm experiences _____ when it increases its output, and as a result, the average total cost of each unit of output decreases.

Jason's carpentry business has a fixed cost of $5,000 from equipment and tool rental and a variable cost of $40,000 when he builds 100 bookshelves per year. The average total cost of producing 100 bookshelves is:

Use the figure Long-Run Average Total Cost Curve for Magma Motors. If this firm is currently producing 10,000 cars per year, what does it experience if it increases output by 500 cars? ​ Figure: Long-Run Average Total Cost Curve for Magma Motors

What is the difference between fixed cost and variable cost?