Exam 7: Costs

A consumer purchases a book by driving across town to a bookstore,standing in line for five minutes to pay the cashier,and then pays $5.The same book is purchased by another consumer who spends 2 minutes placing the order over the internet for $10.The book necessarily cost the first consumer less.

(True/False)

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Question 81

Explain why the marginal cost curve intersects a U-shaped average cost curve at its minimum point.

(Essay)

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Question 82

If the marginal rate of technical substitution for a cost minimizing firm is 10,and the wage rate for labor is $5,what is the rental rate for capital in dollars?

(Multiple Choice)

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Question 83

Sarah earns $40,000 per year working for a large corporation.She is thinking of quitting this job to work full time in her own business.She will invest her savings of $50,000 (which currently has an annual 10% rate of return)into the business.Her annual opportunity cost of this new business is

(Multiple Choice)

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Question 84

Explain the difference between fixed costs in the short run and fixed costs in the long run.

(Essay)

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Question 85

Economists proclaim that competitive firms make zero economic profit in the long run.This shows how

(Multiple Choice)

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Question 86

Suppose the short-run production function is q = 10 ∗ L.If the wage rate is $10 per unit of labor,then MC equals

(Multiple Choice)

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Question 87

Economies of scale and Increasing Returns to Scale are the same thing looked at from either the production or cost perspective.

(True/False)

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Question 88

Wood Working Company (WWC)can produce tables for a cost equal to C = 30 + q_t or chairs for a cost equal to C = 30 + q_c.However,the firm can also produce tables and chairs simultaneously for a cost equal to C = 50 + q_c+ q_t.Does WWC experience economies of scope?

(Multiple Choice)

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Question 89

If the marginal cost of producing a good is increasing as a firm produces more of the good,then which of the following must be TRUE?

(Multiple Choice)

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Question 90

Suppose the cost of producing two goods,x and y,can be represented as C = ax + by + cxy.If the measure of economies of scope,SC,is zero,then which of the following must be true?

(Multiple Choice)

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Question 91

At what output level,q,is average cost minimized if the short-run costs for a company are C = 40 + 4q + q²?

(Multiple Choice)

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Question 92

Explain why in the case of economies of scope the production possibility frontier is bowed outward.

(Essay)

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Question 93

If Option A costs $40 and yields 20 units of output and Option B costs $50 and yields 20 units of output,

(Multiple Choice)

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Question 94

The "Law of Diminishing Marginal Returns" could also be termed the "Law of Increasing Marginal Costs."

(True/False)

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Question 95

If a firm buys a building so as to have office space for its workers,the monthly opportunity cost of the building is best measured as

(Multiple Choice)

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Question 96

The marginal cost curve intersects the average fixed cost curve at its minimum.

(True/False)

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Question 97

If average cost is decreasing,

(Multiple Choice)

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Question 98

When the isocost line is tangent to the isoquant,then

(Multiple Choice)

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Question 99

Explain how a firm can have constant returns to scale in production and economies of scale in cost.

(Essay)

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Question 100

Showing 81 - 100 of 114

A consumer purchases a book by driving across town to a bookstore,standing in line for five minutes to pay the cashier,and then pays $5.The same book is purchased by another consumer who spends 2 minutes placing the order over the internet for $10.The book necessarily cost the first consumer less.

Explain why the marginal cost curve intersects a U-shaped average cost curve at its minimum point.

If the marginal rate of technical substitution for a cost minimizing firm is 10,and the wage rate for labor is $5,what is the rental rate for capital in dollars?

Sarah earns $40,000 per year working for a large corporation.She is thinking of quitting this job to work full time in her own business.She will invest her savings of $50,000 (which currently has an annual 10% rate of return)into the business.Her annual opportunity cost of this new business is

Explain the difference between fixed costs in the short run and fixed costs in the long run.

Economists proclaim that competitive firms make zero economic profit in the long run.This shows how

Suppose the short-run production function is q = 10 ∗ L.If the wage rate is $10 per unit of labor,then MC equals

Economies of scale and Increasing Returns to Scale are the same thing looked at from either the production or cost perspective.

Wood Working Company (WWC)can produce tables for a cost equal to C = 30 + q_t or chairs for a cost equal to C = 30 + q_c.However,the firm can also produce tables and chairs simultaneously for a cost equal to C = 50 + q_c+ q_t.Does WWC experience economies of scope?

If the marginal cost of producing a good is increasing as a firm produces more of the good,then which of the following must be TRUE?

Suppose the cost of producing two goods,x and y,can be represented as C = ax + by + cxy.If the measure of economies of scope,SC,is zero,then which of the following must be true?

At what output level,q,is average cost minimized if the short-run costs for a company are C = 40 + 4q + q²?

Explain why in the case of economies of scope the production possibility frontier is bowed outward.

If Option A costs $40 and yields 20 units of output and Option B costs $50 and yields 20 units of output,

The "Law of Diminishing Marginal Returns" could also be termed the "Law of Increasing Marginal Costs."

If a firm buys a building so as to have office space for its workers,the monthly opportunity cost of the building is best measured as

The marginal cost curve intersects the average fixed cost curve at its minimum.

If average cost is decreasing,

When the isocost line is tangent to the isoquant,then

Explain how a firm can have constant returns to scale in production and economies of scale in cost.

Introduction

Supply and Demand

Applying the Supply and Demand Model

Consumer Choice

Applying Consumer Theory

Firms and Production

Competitive Firms and Markets

Applying the Competitive Model

General Equilibrium and Economic Welfare

Monopoly

Pricing and Advertising

Oligopoly and Monopolistic Competition

Game Theory

Factor Markets

Interest Rates, Investments, and Capital Markets

Uncertainty

Externalities, Open-Access, and Public Goods

Asymmetric Information

Contracts and Moral Hazards

Filters

A consumer purchases a book by driving across town to a bookstore,standing in line for five minutes to pay the cashier,and then pays $5.The same book is purchased by another consumer who spends 2 minutes placing the order over the internet for $10.The book necessarily cost the first consumer less.

Explain why the marginal cost curve intersects a U-shaped average cost curve at its minimum point.

If the marginal rate of technical substitution for a cost minimizing firm is 10,and the wage rate for labor is $5,what is the rental rate for capital in dollars?

Sarah earns $40,000 per year working for a large corporation.She is thinking of quitting this job to work full time in her own business.She will invest her savings of $50,000 (which currently has an annual 10% rate of return)into the business.Her annual opportunity cost of this new business is

Explain the difference between fixed costs in the short run and fixed costs in the long run.

Economists proclaim that competitive firms make zero economic profit in the long run.This shows how

Suppose the short-run production function is q = 10 ∗ L.If the wage rate is $10 per unit of labor,then MC equals

Economies of scale and Increasing Returns to Scale are the same thing looked at from either the production or cost perspective.

Wood Working Company (WWC)can produce tables for a cost equal to C = 30 + qt or chairs for a cost equal to C = 30 + qc.However,the firm can also produce tables and chairs simultaneously for a cost equal to C = 50 + qc + qt.Does WWC experience economies of scope?

If the marginal cost of producing a good is increasing as a firm produces more of the good,then which of the following must be TRUE?

Suppose the cost of producing two goods,x and y,can be represented as C = ax + by + cxy.If the measure of economies of scope,SC,is zero,then which of the following must be true?

At what output level,q,is average cost minimized if the short-run costs for a company are C = 40 + 4q + q2?

Explain why in the case of economies of scope the production possibility frontier is bowed outward.

If Option A costs $40 and yields 20 units of output and Option B costs $50 and yields 20 units of output,

The "Law of Diminishing Marginal Returns" could also be termed the "Law of Increasing Marginal Costs."

If a firm buys a building so as to have office space for its workers,the monthly opportunity cost of the building is best measured as

The marginal cost curve intersects the average fixed cost curve at its minimum.

If average cost is decreasing,

When the isocost line is tangent to the isoquant,then

Explain how a firm can have constant returns to scale in production and economies of scale in cost.

Introduction

Supply and Demand

Applying the Supply and Demand Model

Consumer Choice

Applying Consumer Theory

Firms and Production

Competitive Firms and Markets

Applying the Competitive Model

General Equilibrium and Economic Welfare

Monopoly

Pricing and Advertising

Oligopoly and Monopolistic Competition

Game Theory

Factor Markets

Interest Rates, Investments, and Capital Markets

Uncertainty

Externalities, Open-Access, and Public Goods

Asymmetric Information

Contracts and Moral Hazards

Filters

Wood Working Company (WWC)can produce tables for a cost equal to C = 30 + q_t or chairs for a cost equal to C = 30 + q_c.However,the firm can also produce tables and chairs simultaneously for a cost equal to C = 50 + q_c+ q_t.Does WWC experience economies of scope?

At what output level,q,is average cost minimized if the short-run costs for a company are C = 40 + 4q + q²?