Exam 13: The Costs of Production

Scenario 13-4 Wanda owns a lemonade stand.She produces lemonade using five inputs: water,sugar,lemons,paper cups,and labor.Her costs per glass are as follows: $0.01 for water,$0.02 for sugar,$0.03 for lemons,$0.02 for cups,and $0.10 for the opportunity cost of her labor.She can sell 300 glasses for $0.50 each. -Refer to Scenario 13-4.What are Wanda's explicit costs per glass?

Which of the following measures of cost is best described as "the increase in total cost that arises from an extra unit of production?"

Which of the following statements is correct?

Katherine gives piano lessons for $15 per hour.She also grows flowers,which she arranges and sells at the local farmer's market.One day she spends 5 hours planting $50 worth of seeds in her garden.Once the seeds have grown into flowers,she can sell them for $150 at the farmer's market.Which of the following statements is correct regarding Katherine's profits from selling flowers?

If the marginal cost of producing the fifth unit of output is higher than the marginal cost of producing the fourth unit of output,then at five units of output,average total cost must be rising.

Table 13-10 Jimmy's Gigaplots Factory -Refer to Table 13-10.What is the average fixed cost of producing 8 gigaplots at Jimmy's Gigaplot factory?

For a large firm that produces and sells automobiles,which of the following costs would be a variable cost?

When marginal cost is less than average total cost,

Dolores used to work as a high school teacher for $40,000 per year but quit in order to start her own catering business.To invest in her factory,she withdrew $20,000 from her savings,which paid 3 percent interest,and borrowed $30,000 from her uncle,whom she pays 3 percent interest per year.Last year she paid $25,000 for ingredients and had revenue of $60,000.She asked Louis the accountant and Greg the economist to calculate her profit for her.

Table 13-11 -Refer to Table 13-11.What is variable cost when output equals 30 units?

The average total cost curve reflects the shape of both the average fixed cost and average variable cost curves.

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9.At output levels greater than N,the firm experiences

Economists assume that the typical person who starts her own business does so with the intention of

In the long run Firm A incurs total costs of $1,200 when output is 30 units and $1,400 when output is 40 units.Firm A exhibits

Variable cost divided by quantity produced is

Table 13-7 -Refer to Table 13-7.The average fixed cost of producing five widgets is

Total revenue minus only implicit costs is called

A production function is a relationship between inputs and

When a firm is experiencing economies of scale,

Suppose that for a particular firm the only variable input into the production process is labor and that output equals zero when no workers are hired.In addition,suppose that marginal cost of the third worker hired is $40,and the average total cost when three workers are hired is $50.What is the total cost of production when three workers are hired?