Exam 9: Technology, Production, and Costs

In 1955, the chairman of the Sony corporation offered to sell transistor radios through department stores in the United States.Sony based its selling price on its average total cost of production.If a store bought 5,000 radios, Sony would sell them at $29.95 each.For 10,000 there would be a discount, and for more than 10,000 the price would begin to climb.Based on this information, 10,000 radios was located at the

Table 9.1 Table 9.1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May 2011. -Refer to Table 9.1.Diminishing marginal returns sets in when the ________ worker is hired.

Figure 9.7 -Refer to Figure 9.7.The lines shown in the diagram are isocost lines.Which of the following shows a decrease in the price of capital while the price of labour remains unchanged?

If the 15th unit of output has a marginal cost of $29.50 and the average cost of producing 14 units of output is $30.23, what will happen to the average cost of production if the 15th unit is produced?

Accounting costs exclude implicit costs.

If marginal cost is above the average variable cost, then average variable cost is decreasing.

A characteristic of the long run is

Suppose the price of capital and labour remain constant but that the average educational level of workers has increased and therefore, productivity of labour increases.This would lead a firm

The production function shows

A firm's cost of production is determined by all of the following except

Due to a downturn in business and increased competition, Dave Amundson, owner of Dave's Delicious Donuts, decides to close half of his 36 donut shops.Use a graph to illustrate average total cost curves for Dave's Delicious Donuts before and after closing the 18 stores.Assume that after closing the stores, Dave's Delicious Donuts will be producing at minimum average total cost.

A downward sloping marginal product of labour curve demonstrates the law of diminishing marginal returns.

As output increases, average fixed cost gets smaller and smaller.

Table 9.2 Quantity of Quatity of foot Variable Average total Margiual workers ruassages per day Fxed cost cost Total cost cost cost 0 0 1 10 2 25 3 45 4 60 5 70 -Refer to Table 9.2.Alicia Gregory owns a foot massage business.She leases 4 computer-controlled massage booths, for which she pays $125 per day.She cannot increase the number machines she leases without giving the manufacturer 3 months notice.She can hire as many workers as she wants at a cost of $75 per day per worker.These are the only two inputs she uses in her business.Use this information to fill in the columns in the above table.

In the long run the relevant cost is total cost.

As a firm hires more labour in the short run, the

Figure 9.7 -Refer to Figure 9.7.The lines shown in the diagram are isocost lines.Which of the following shows an increase in the firm's total cost while the price of labour and capital remain unchanged?

If a firm decreases its plant size and finds that its long-run average costs have decreased, then

Who was the economist who first analyzed the advantages of specialization and the division of labour?

What is the difference between explicit costs and implicit costs? List three examples each of explicit costs and implicit costs that may be experienced by a small business.