Exam 11: Technology, Production, and Costs

Vipsana's Gyros House sells gyros.The cost of ingredients (pita, meat, spices, etc.)to make a gyro is $2.00.Vipsana pays her employees $60 per day.She also incurs a fixed cost of $120 per day.Calculate Vipsana's average fixed cost per day when she produces 50 gyros using two workers?

All of the following statements are true of the minimum efficient scale except one.Which one?

Long-run cost curves are U-shaped because

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

Use a long-run average cost curve graph to illustrate how diseconomies of scale would not make it beneficial for two companies to go through with a merger.

Joan Jillson owns a coffee shop.Assume that the marginal product of the labor Joan employs (MPL)equals 500 cups per week and the marginal product of her shop's capital (MPK)equals 1,000.Assume also that the wage (w)Joan pays her workers equals $250 per week and the rental price (r)of her capital - her coffee machines - equals $500 per week.Which of the following correctly analyzes whether Joan is minimizing her costs?

If the total cost of producing 20 units of output is $1,000 and the average variable cost is $35, what is the firm's average fixed cost at that level of output?

What is an isoquant? What is the slope of an isoquant?

Which of the following describes how output changes in the short run? Because of specialization and the division of labor, as more workers are hired,

Average total cost is equal to

Figure 11-18 -Refer to Figure 11-18.A curve that connects points A, D, and E is called

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

A firm's short-run average total cost curve is parallel to its short-run average variable cost curve.

Which of the following equations is correct?

In economics, what is the difference between the short run and the long run?

Use the general relationship between marginal and average values to explain why a marginal cost curve must intersect an average total cost curve and an average variable cost curve at their minimum points.

Which of the following statements is false?

Which of the following is a fixed cost?

The minimum efficient scale is

Is it possible for average total cost to be decreasing over a range of output where marginal cost is increasing? Briefly explain.