Exam 11: Technology, Production, and Costs

Jennifer Borts moves her office from the premises she rents at a local mall to her home.As a result of this move

If, after hiring the 6th worker, a firm's output falls, then the marginal product of the 6th worker is negative.

Adam spent $10,000 on new equipment for his small business, "Adam's Fitness Studio." Membership at his fitness center is very low and at this rate, Adam needs an additional $12,000 per year to keep his studio open.Which of the following is true?

Minimum efficient scale is defined as the level of output at which the short-run average total cost stops decreasing.

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

Article Summary Due to changing shopping habits and increased online sales, Macy's announced it would be closing 35 to 40 underperforming stores in early 2016. The stores represent about 5 percent of its total locations, and the company expects to lose about $300 million in sales, or 1 percent of total sales, from the closures. Over the past five years, Macy's has closed 52 stores and opened 12 new locations, leaving the company 770 stores in 45 states. Source: Ed Brackett and Alexander Coolidge, "Macy's to close up to 40 stores," USA Today, September 9, 2015. -Refer to the Article Summary above.Use a graph to illustrate average total cost curves for Macy's before and after closing the 35 to 40 stores.Assume that after closing the stores, Macy's will be producing at minimum average total cost.

If the long-run average total cost curve is downward-sloping, then the firm is experiencing decreasing returns to scale.

After Suzie, owner of Suzie's Sweet Shop, hires her 8th worker the average product of labor declines.Which of the following statements must be true?

Table 11-1 Table 11-1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May. -Refer to Table 11-1.What is the average product of labor when the farm hires 5 workers?

Suppose Argyle Sachs has to choose between building a smaller sweater factory and a larger sweater factory.In the following graph, the relationship between costs and output for the smaller factory is represented by the curve ATC₁, and the relationship between costs and output for the larger factory is represented by the curve ATC₂. A.If Argyle expects to produce 3,600 sweaters per month, should he build a smaller factory or a larger factory? Briefly explain? B.If Argyle expects to produce 5,000 sweaters per month, should he build a smaller factory or a larger factory? Briefly explain. C.If the average cost of producing sweaters is lower in the larger factory when Argyle produces 6,500 sweaters per week, why isn't it also lower when Argyle produces 4,000 sweaters per week?

Increases in the marginal product of labor result from

Average fixed costs of production

On an isoquant/isocost graph, the least cost input combination of producing a given output is

Which of the following statements regarding a firm's long-run average total cost (LRATC)curve and its short-run average total cost (SRATC)curve is true?

Figure 11-2 -Refer to Figure 11-2.The average product of labor declines after L₂ because

In the short run, changes in output can only be brought about by a change in the quantity of variable inputs.

Which of the following statements best describes the economic short run?

The slope of an isoquant measures

Which of the following statements is true?

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