Exam 6: Production Costs

Sam quits his job as an airline pilot and opens his own pilot training school.He was earning $40,000 as a pilot.He withdraws $10,000 from his savings where he was earning 6 percent interest and uses the money in his new business.He uses a building he owns as a hanger and could rent it out for $5,000 per year.He rents a computer for $1,200,buys office supplies for $500,rents an airplane for $6,000,pays $1,300 for fuel and maintenance,and hires one worker for $30,000.Sam's total revenue from pilot training classes this year equaled $90,400.Sam's explicit costs this year equals:

When a total output curve is falling,its corresponding marginal product curve is:

Which statement about the total variable cost curve is true?

Economic profit is:

In the long run,firms in many industries often experience a falling average total cost curve as a result of:

A firm has $200 million in total revenue and explicit costs of $190 million.If its owners have invested $100 million in the company at an opportunity cost of 10 percent interest per year,the firm's accounting profit is:

If economic profit is zero,then a normal profit is earned.

Which of the following statements is true?

Exhibit 6-4 A marginal product curve -As shown in Exhibit 6-4,the law of diminishing returns applies in the range of:

Exhibit 6-11 Short-run cost curves schedule for pizzeria's hourly production -In Exhibit 6-11,the pizzeria's fixed cost is equal to:

In the long run,total fixed cost:

Suppose there is a technology to produce Grendels such that there are diseconomies of scale after the first unit is produced.There are both fixed (a physical plant called a lair)and variable (food that grows in lairs)costs of production.Which statement is true?

A young chef is considering opening his own sushi bar.To do so,he would have to quit his current job,which pays $20,000 a year,and take over a store building that he owns and currently rents to his brother for $6,000 a year.His expenses at the sushi bar would be $50,000 for food and $2,000 for gas and electricity.What are his explicit costs?

If a firm's marginal cost exceeds its average cost,then its average cost must be rising.

The vertical distance between the average total cost curve and the average variable cost curve at any given output level equals average fixed cost at that particular output level.

Exhibit 6-16 Long-run average cost curves -Which firm in Exhibit 6-16 displays a long-run average cost curve with diseconomies beginning at 2,000 units of output per week?

The long run is a planning period:

When the cost curves have U-shapes,at the point where marginal cost equals average total cost:

Exhibit 6-16 Long-run average cost curves -In Exhibit 6-16,which firm's long-run average cost curve experiences constant returns to scale?

The law of diminishing returns applies to which of the following segments of the marginal product of labor curve?