Exam 11: Technology, Production, and Costs

The explicit cost of production is also called

Stan owns a software design business.He does not have time to expand his office space or redesign the layout of his office.He can increase the amount of work he does by working more hours, asking his current employees to work more hours, or hiring more employees.The relationship between Stan's inputs and the maximum output his firm can produce is called his

Which of the following are implicit costs for a typical firm?

Two stores-Lazy Guys and Ralph's Recliners-are located in the same city.Both stores buy recliner chairs from the same manufacturer at the same price and both stores are about the same size, so that the fixed costs of production for both stores are the same.Ralph's Recliners sells more recliners per month and Ralph's has a lower average total cost of production.Which of the following can explain why the average total cost of production is lower for Ralph's Recliners?

The short run is the time period during which a firm has at least one input constraint.

Which of the following is an example of positive technological change?

Figure 11-13 -Refer to Figure 11-13.The lines shown in the diagram are isocost lines.If the price of labor is $50 per unit, what is the price of capital along the isocost CE?

Table 11-3 -Refer to Table 11-3.The table above refers to the relationship between the quantity of workers employed and the number of cardboard boxes produced per day by Manny's House of Boxes.The capital used to produce the boxes is fixed.The average product of labor will equal 66 boxes when Manny hires

The total output produced by a firm divided by the quantity of workers employed by the firm is the definition of

The slope of an isocost line ________ and equals the negative of ________.

The marginal rate of technical substitution is measured by

Figure 11-4 -Refer to Figure 11-4.What happens to the average fixed cost of production when the firm increases output from 150 to 200?

If the marginal product of labor is 45 units of output and the marginal product of capital is 56 units of output while the wage rate is $20 per worker and the cost of capital is $28 per machine, are these two inputs being used in the least-cost combination and what should be done if they are not?

Is it possible for technological change to be negative? If so, give an example.

The additional output a firm produces by hiring one more worker is called the marginal product of labor.

What are economies of scale? What are diseconomies of scale?

Table 11-9 -Refer to Table 11-9.Clock It To Me manufactures clock radios.The table above shows estimates of fixed cost per period and average variable cost for three possible plant sizes. a.You are employed as the company's cost accountant and have been asked to prepare cost estimates for various output levels for each of the three possible plant sizes.Record your calculations in the table below. Average Cost of Production b.For each of the three output levels, which plant size will generate the lowest average total cost of production? c.Suppose the firm currently sells 8,000 clock radios per period (using the optimal plant size for this output level).Now, however, it has just secured a long-term contract to supply 20,000 clock radios per period.In the short run, what is the average total cost of producing 20,000 clock radios? Provide a numerical value based on your answer in part a. d.What happens to average total cost of production in the long run? Provide a numerical value based on your answer in part a.

In the short run, why does a production function eventually display diminishing returns to labor?

A firm increased its production and sales because the firm's manager rearranged the layout of his factory floor.This is an example of

The slope of a typical isoquant is negative because to produce a given output, a producer