Exam 6: Production Costs

Economists say that a firm has a normal profit when:

A car leasing company that expands its size by buying its competitors may run the risk of increasing production cost per unit due to:

Exhibit 6-8 Costs schedules for producing pizza -By filling in the blanks in Exhibit 6-8,the marginal cost of the fourth pizza is shown to be equal to:

Exhibit 6-13 Cost curves -In Exhibit 6-13,ATC is shown by the graph labeled:

What is the shape of the average fixed cost curve for a firm in the short run?

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 equaled $90,400.Sam's implicit costs for this year are equal to:

Two friends,Diane and Sam,own and run a bar.Diane tends bar on Monday,Wednesday,and Friday and receives a wage in addition to tips.Sam tends bar on Tuesday,Thursday,and Saturday and receives only tips.Which of the following represents an implicit cost of operating the bar?

American Airlines makes numerous nonstop flights from Chicago's O'Hare Airport to the airport at Dallas-Fort Worth.The distance between those two cities is 1,000 miles.The only variable cost,fuel,costs $.06 for each passenger-mile it flies.Bob,on his way to an emergency business meeting,buys a ticket in coach class for $1,300 at the very last minute.The marginal cost of flying Bob from Chicago to Dallas-Fort Worth is:

In the long run,all costs are fixed costs.

Which of the following best describes a production function?

Which of the following best describes average variable cost?

Exhibit 6-15 Long-run average cost -In Exhibit 6-15,diseconomies of scale are shown in the range of:

The amount of money that could have been made by renting a piece of land to be used for building an office building instead of using the land for employee parking is a(n):

The marginal product curve rises when the marginal cost curve rises.

Exhibit 6-16 Long-run average cost curves -Which firm in Exhibit 6-16 displays a long-run average cost curve with economies of scale throughout the range of output shown?

Since the 1980s,Wal-Mart stores have appeared in almost every community in America.Wal-Mart buys their goods in large quantities and therefore at cheaper prices.Wal-Mart also locates its stores where land prices are low,usually outside of the community business district.Many customers shop at Wal-Mart because of low prices and free parking.Local retailers,like the neighborhood drug store,often go out of business because they lose customers.This story demonstrates that:

Long-run economies of scale exist when the long-run average cost curve:

Distinguish economies and diseconomies of scale.How can the extent to which economies and diseconomies of scale explain the size and number of real world firms in an industry?

Barbara owns a small shop where dresses are made.At the end of a given month,she has 250 dresses.Her expenses for the month are $1,000 for rent,$6,000 for wages,$1,500 for fabric and thread,and $500 for electricity.Her total variable costs for the month are:

Constant returns to scale cause the long-run average cost curve to be: