Exam 8: Technology,Production,and Costs

The marginal product of labor is calculated using the formula

If,after hiring the 6th worker,a firm's output falls,then the marginal product of the 6th worker is negative.

An avocado orchard employs five full-time workers.Currently,the average product of labor is 120 pounds of avocados per day.The orchard hires a 6th full-time worker and his marginal product is 150 pounds of avocados.The average product of the six workers will now be

Figure 8-11 Figure 8-11 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 8-11.The minimum efficient scale of output is reached at what rate of output?

Minimum efficient scale is defined as the level of output at which the short-run average total cost stops decreasing.

If,when a firm doubles all its inputs,its average cost of production decreases,then production displays

If average product is decreasing,then marginal product must be negative.

The long-run average cost curve shows

The law of diminishing marginal returns

Figure 8-2 -Refer to Figure 8-2.Short run output is maximized at

Table 8-2 Number of Workers Applesper Day (bushels) 1 50 2 120 3 180 4 230 5 270 6 300 Table 8-2 summarizes production at the Crunchy Apple Orchard for the month of April. -Refer to Table 8-2.What is the marginal product of the 4th worker?

Due to changing shopping habits and increased online sales, Macy's announced it would be closing 100 stores in early 2017. The stores represent about 15 percent of its total locations, and some analysts believe the company needs to close an additional 100 stores as well. Macy's sales fell by 7.5 percent in the fourth quarter of 2016, and by the end of 2017, the company was expected to have about 600 stores open, down from almost 800 in 2014. Source: Hayley Peterson, "Macy's may shut down even more stores," Business Insider, May 12, 2017. -Refer to the Article Summary.Use a graph to illustrate average total cost curves for Macy's before and after closing the 100 stores.Assume that after closing the stores,Macy's will be producing at minimum average total cost.

Adam spent $10,000 on new equipment for his small business,"Adam's Fitness Studio." Membership at his fitness center is very low and at this rate,Adam needs an additional $12,000 per year to keep his studio open.Which of the following is true?

To improve delivery,Joe's Pizza Emporium made a change that involved taking better account of traffic to avoid delays in delivering pizzas.This is an example of

Table 8-9 Fixed Cost Average Variable Cost Small plant \ 10,000 \ 2.00 Medium plant 15,000 1.30 Large plant 25,000 0.50 -Refer to Table 8-9.Clock It To Me manufactures clock radios.The table above shows estimates of fixed cost per period and average variable cost for three possible plant sizes. a.You are employed as the company's cost accountant and have been asked to prepare cost estimates for various output levels for each of the three possible plant sizes.Record your calculations in the table below. Average Cost of Production 5,000 Clock Radios 8,000 Clock Radios 20,000 Clock Radios Small plant Medium plant Large plant b.For each of the three output levels,which plant size will generate the lowest average total cost of production? c.Suppose the firm currently sells 8,000 clock radios per period (using the optimal plant size for this output level).Now,however,it has just secured a long-term contract to supply 20,000 clock radios per period.In the short run,what is the average total cost of producing 20,000 clock radios? Provide a numerical value based on your answer in part a. d.What happens to average total cost of production in the long run? Provide a numerical value based on your answer in part a.

Which of the following is an example of market "production," as used by economists?

A firm increased its production and sales because the firm's manager rearranged the layout of his factory floor.This is an example of

Which of the following are implicit costs for a typical firm?

The additional output a firm produces by hiring one more worker is called the marginal product of labor.

Golda Rush quit her job as a manager for Home Depot to start her own hair dressing salon,Goldilocks.She gave up a salary of $40,000 per year,invested her savings of $30,000 (which was earning 5 percent interest)and borrowed $10,000 from a close friend,agreeing to pay 5 percent interest per year.In her first year,Golda spent $18,000 to rent a salon,hired a part-time assistant for $12,000 and incurred another $15,000 in expenses on equipment and hairdressing material.Based on this information,what is the amount of her implicit costs for the first year?