Exam 13: The Costs of Production

Graph 13-4 -Refer to Graph 13-4. Which of the following can be inferred from the figure shown? (i) marginal costs vary for different levels of output (ii) diminishing marginal product does not occur directly after the first worker (iii) marginal product of the second worker exceeds that of the first

Table 13-2 Adrienne's Premium Boxing Service subcontracts with a chocolate manufacturer to box premium chocolates for their mail order catalogue business. Adrienne rents a small room for $150 a week in the downtown business district that serves as her factory. She can hire workers for $275 a week. Costs are in dollars per week. -Refer to Table 13-2. What is the marginal product of the fourth worker?

The adage 'Jack of all trades, master of none' helps explain why some firms experience economies of scale.

Graph 13-6 This graph depicts average total cost functions for a firm that produces automobiles. Use the graph to answer the following question(s). -Refer to Graph 13-6. Which curve represents the long-run average total cost?

Average total cost reveals how much total cost will change as the firm alters its level of production.

Economists are primarily interested in:

Even if a firm was to produce nothing, it still incurs some variable costs in the short-run.

Graph 13-1 This graph depicts a production function for a firm that produces cookies. Use the graph to answer the following question(s). -Refer to Graph 13-1. As the number of workers increases:

Farmer Jack is a watermelon farmer. If Jack plants no seeds on his farm, he gets no harvest. If he plants one bag of seeds, he gets 30 watermelons. If he plants two bags of seeds, he gets 50 watermelons. If he plants three bags of seeds he gets 60 watermelons. A bag of seeds costs $100 and seeds are his only costs. -Suppose an apple orchardist increases the number of fruit pickers hired for a season. The number of apple trees remains the same. As a result the orchardist's:

Diminishing marginal product causes the average variable cost curve to:

When marginal cost exceeds average total cost average:

The shape of the total cost curve is unrelated to the shape of the production function.

Marginal cost is equal to average total cost when:

A firm's profit is equivalent to:

Consider the following graph of a firm in the short-run. Identify the average fixed cost curve, the marginal cost curve, the average variable cost curve and the average total cost curve.

Table 13-3 Consider the following firm which makes high-performance racing bicycles. All costs are given in dollars. Output is shown on a monthly basis. The firm's fixed costs include a rent of $800 and a lease cost of $400 per month. -Refer to Table 13-3. How many bicycles are produced when marginal cost is $321?

Average total cost is equal to:

Jack received all As in his classes last semester. If Jack gets all Cs in his classes this semester, his grade point average may or may not fall.

Graph 13-5 The set of curves above reflect information about the cost structure of a firm. Use this graph to answer the following question(s). -Refer to Graph 13-5. Which of the curves is most likely to represent marginal cost?

Table 13-1 Measures of Cost for Splashy Cardboard Kayak Factory. -Refer to Table 13-1. What is the variable cost of producing zero kayaks?