Exam 14: Production and Cost

Jake is a corn farmer in Nebraska.He rents his land on a long-term lease for $250,000 a year.He pays his farm hands $128,000 a year.Is his rent a fixed cost or a variable cost? Are the wages he pays his workers a fixed cost or a variable cost? Briefly explain your answers.

The opportunity cost of owning and using a firm's capital is defined as the capital's

The total variable cost curve ________ because ________ as output increases.

-Average variable cost equals

The opportunity cost of a firm using its own capital is

The law of decreasing returns applies to

Which of the following is an implicit cost in Jim's business venture? I∙the salary Jim could have earned at another job Ii∙the interest Jim must pay on the loan he incurred to help open his business Iii∙the interest Jim lost when he used his savings to help open his business

Which curve shows the lowest average total cost at which it is possible to produce each output when the firm has time to change both its labor force and plant size?

Which of the following is an example of an implicit cost?

-The table above shows the total product schedule for Rick's Lawn Service, a yard care company.Increasing marginal returns

The total product curve shows the relationship between total product and

The short run is a time period that is

Which of the following is a fixed cost for ACME manufacturing?

Are the short-run average total cost curve and the long-run average cost both U-shaped for the same reasons? If so, carefully explain these reasons.If not, explain why each curve is U-shaped.

The average total cost curve is U-shaped.At the quantity of output where average total cost is at its minimum, is the marginal cost curve above the average total cost curve, below the average total cost curve, or intersecting the average total cost curve?

Jill runs a factory that makes lie detectors in Little Rock, Arkansas.This month, Jill's 34 workers produced 680 machines.Jill's average product of labor equaled ________ lie detectors per worker.

Accountants calculate

-The table above shows a total product schedule.Suppose that labor costs $20 per worker and fixed costs are $60.The average variable cost of producing 80 units equals ________ per unit.

Ayanna grows herbs.Last year she grew 2,000 pounds of herbs in a year while using 250 square feet of land and 1 worker.This year she doubled her land to 500 square feet, doubled her workers to 2, and grew 4,500 pounds of herbs.She sells her rare, organic herbs for $50 a pound.She pays her a worker $25,000 a year and rents her land for $100 per square foot for a year.These are her only costs. a∙What was Ayanna's total cost last year and this year? b∙What was Ayanna's average total cost last year and this year? c∙Did Ayanna experience economies or diseconomies of scale?

The difference between a firm's total revenue and its total cost is its ________ profit.