Exam 13: The Costs of Production

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. Curve A is necessarily U-shaped because of:

Economists class the short run as the time period:

Identify the statement about the production function that is true?

Amy owns a photo developing shop. She also does contract photography. If she takes on a contract, she cannot develop photos in that time and her customers use another firm. Suppose Amy rejects a contract to photograph a wedding. This would have been a five hour job and Amy charges $500 per hour. She spent those five hours developing photos. Her chemicals and paper cost $1250. She earned $3500 in sales. -According to the information provided, what is the total opportunity cost that Amy incurred to spend her time developing photographs?

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. If the firm is currently operating on ATC_B, what options does it have if it wants to change its level of automobile production over the next couple of weeks?

The long-run average total cost curve is:

How would a production function that exhibits decreasing marginal product affect the shape of the total cost curve? Explain or draw a graph.

When average total cost rises if a producer either increases or decreases production, then the firm is said to be operating at efficient scale.

Marginal cost tells us the:

Which of the following is an implicit cost of owning a business? (i) forgone savings account interest when personal money is invested in the business (ii) interest expense on existing business loans (iii) damaged or lost inventory

Specialisation among workers occurs when:

Amy owns a photo developing shop. She also does contract photography. If she takes on a contract, she cannot develop photos in that time and her customers use another firm. Suppose Amy rejects a contract to photograph a wedding. This would have been a five hour job and Amy charges $500 per hour. She spent those five hours developing photos. Her chemicals and paper cost $1250. She earned $3500 in sales. -According to the information provided, Amy's accounting profit equals:

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 average total cost?

Marginal cost equals which of the following? (i) the average fixed cost of the current unit (ii) the change in total costs divided by change in quantity produced (iii) the change in variable costs divided by change in quantity produced

Amy owns a photography business. Her friend who is an economist most likely includes which of the following costs on her financial statements?

Table 13-1 Measures of Cost for Splashy Cardboard Kayak Factory. -Refer to Table 13-1. The marginal cost of producing the sixth kayak is:

Diminishing marginal product occurs:

In some cases, specialisation allows larger factories to produce goods at a lower average cost than smaller factories.

An example of an explicit cost of production would be:

Which of the following is equivalent to economic profit? (i) total revenue less explicit costs and less implicit costs (ii) total revenue less opportunity costs (iii) accounting profit