Exam 11: Technology, Production, and Costs

Table 11-7 Table 11-7 shows cost data for Lotus Lanterns, a producer of whimsical night lights. -Refer to Table 11-7.What is the variable cost of production when the firm produces 115 lanterns?

If an airport decides to expand by building an additional passenger terminal, and in doing so it lowers its average cost per airplane landing, it was previously operating at

Figure 11-11 Figure 11-11 illustrates the long-run average cost curve for a firm that produces picture frames.The graph also includes short-run average cost curves for three firm sizes: ATCₐ, ATCb and ATCc. -Refer to Figure 11-11.If the firm chooses to produce and sell 25,000 frames per month by operating in the short run with a scale operation represented by ATCc

A firm's expansion path

Marginal cost is equal to the

Table 11-5 -Refer to Table 11-5.Suzette's Fancy Packaging subcontracts with Sunshineland Pecans to box dried fruit and nuts for Suzette's mail order business.Suzette rents space for her factory for $400 a week in a nearby strip mall.She can hire temporary workers for $200 a week.Table 11-5 above shows her output and cost data.Use the table to answer questions a-e. a.Complete the table. b.In the last week of summer Suzette closes her business to go on a family vacation.What are her costs during that week? c.In one week Suzette exactly breaks even.If her revenue for the week is $1,200, how many boxes of fruit and nuts did she produce? d.Judging from the marginal product of labor data, would you say that Suzette had to settle for increasingly unproductive workers? Explain your answer. e.Suzette has received an order for 1,500 boxes of nuts per week for the next 3 months.If she expects the trend in the marginal product of labor will continue in the same direction, what do you think she should do? Should she not commit until she can move to a larger space or should she just hire more workers? Explain your answer.

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

Accounting costs exclude implicit costs.

Table 11-6 -Refer to Table 11-6.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.

The marginal product of labor is defined as

Jayanthi moves her yoga studio from her home to a space she rents in Oakland, California.Holding everything else constant, as a result of this move

Figure 11-11 Figure 11-11 illustrates the long-run average cost curve for a firm that produces picture frames.The graph also includes short-run average cost curves for three firm sizes: ATCₐ, ATCb and ATCc. -Refer to Figure 11-11.The minimum efficient scale of output is reached at what rate of output?

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

If 11 workers can produce a total of 54 units of a product and a 12th worker has a marginal product of 6 units, then the average product of 12 workers is

A U-shaped long-run average cost curve implies that a firm experiences economies of scale at low levels of production and diseconomies of scale at high levels of production.

Long-run cost curves are U-shaped because

Figure 11-1 -Refer to Figure 11-1.The average product of the 4th worker

Suppose two countries use different combinations of inputs, such as labor and capital, to produce the same product.This implies all of the following except that

What is minimum efficient scale? What is likely to happen in the long run to firms that do not reach minimum efficient scale?

Figure 11-8 -Refer to Figure 11-8 above to answer the following questions. a.Identify the curves in the diagram. A ________ B ________ C ________ b.What is the numerical value of fixed cost when the quantity of output = 10? c.What is the numerical value of variable cost when the quantity of output = 10? d.What is the numerical value of total cost when the quantity of output = 10? e.What is the numerical value of average fixed cost when the quantity of output = 10? f.What is the numerical value of average total cost when the quantity of output = 10? g.On the graph, identify the area that represents the total variable cost of production when the quantity of output = 10. h.On the graph, identify the area that represents the fixed cost of production when the quantity of output = 10.