Exam 14: Production and Cost

Suppose a firm's total revenue is $1,000,000.The firm has incurred explicit costs of $750,000.There is also $50,000 of forgone wages by the owner, $10,000 of forgone interest by the owner, $3,000 worth of economic depreciation, and $20,000 worth of normal profit.What is the firm's economic profit?

-Anna owns a dog grooming salon in Brunswick, Georgia.The above table has Anna's total product schedule.Anna pays each worker $300 per week and she pays rent of $600 a week for her salon.These are her only costs.When Anna has a staff of 6 workers, her average variable cost equals

Ajax Manufacturing has a fixed scale of plant with the levels of total product given in the table for different levels of labor.Complete the table by calculating the average product and marginal product.

-The above table gives the total cost schedule for oil changes at the local Jiffy Lube. a∙What is Jiffy Lube's total fixed cost? b∙What is the total variable cost of 2 oil changes? c∙What is the average variable cost of 4 oil changes? d∙What is the average fixed cost of 2 oil changes? e∙What is the marginal cost of the 3rd oil change?

The figure above shows some of a firm's cost curves. -Based on the figure above, curve D is the firm's

Suppose the local newspaper hires students to fold and bag newspapers for delivery and pays them $20 per shift.Five students can fold and bag 300 newspapers per shift.The fourth student added 50 newspapers to total output.The cost of the capital the firm uses is fixed at $50 per shift. a∙Is the newspaper operating in the long run or short run? Why? b∙What is the average product of 5 students? c∙Calculate the total fixed, total variable, and total costs of folding and bagging 300 newspapers. d∙Calculate the average fixed, average variable, and average total costs of folding and bagging 300 newspapers. e∙What is the marginal cost of one of the 50 newspapers folded and bagged by the fourth student?

Dr.Khan starts his own dental practice after quitting his $150,000 job at The Mall Dental Clinic.His revenues for the first year are $500,000.He paid $90,000 in rent for the dental office, $60,000 for his office manager's salary, $24,000 for the dental hygienist, $150,000 for insurance, and $6,000 for other miscellaneous costs.The normal profit from running his business is $20,000.

The law of decreasing returns states that as a firm uses more of a

In the long run, constant returns to scale necessarily occur when the firm increases its production and the firm's

-The above figure represents the average total cost curves of a wheat farmer. a∙Which average total cost curve has the lowest average total cost of producing 30,000 bushels of wheat? b∙Over what range of output is the farmer experiencing economies of scale? c∙Over what range of output is the farmer experiencing diseconomies of scale? d∙Which average total cost curve has the lowest possible average cost of production? e∙Which average total cost curve represents the largest plant?

The paramount goal of a firm is to

A normal profit is

-The table above shows the total product schedule for Rick's Lawn Service, a yard care company.When does the average product of labor equal the marginal product of labor?

-The above table gives some production and cost information for Flaming Fernando's, a restaurant that sells Fiery Frijoles.What is the average variable cost of producing 1,000 frijoles?

If 25 workers can pick 100 flats of strawberries per hour, then average product is

If the average product of labor curve is rising, i. the average variable cost curve is falling. ii. the marginal cost curve is definitely falling. iii. the marginal product curve has reached its maximum.

Bill is an economics professor who earns $40,000 teaching but decides to leave and fulfill his dream of catering barbecues.During his first year of barbecuing he earned total revenue of $60,000.He spent $30,000 on food and supplies.He also paid his wife $10,000 to help serve food.The normal profit for an entrepreneur running a barbecue business is $3,000.He also rented an industrial grill/fry truck for $12,000.An accountant would conclude that Bill's profit was

-Anna owns a dog grooming salon in Brunswick, Georgia.The above table has Anna's total product schedule.Anna pays each worker $300 per week and she pays rent of $600 a week for her salon.These are her only costs.When Anna has a staff of 2 workers, her average fixed cost equals

Average total cost equals

The primary goal of a business firm is to