Exam 13: The Costs of Production

Scenario 13-1 Joe wants to start his own business,which will require that he purchase a factory that costs $400,000.Joe currently has $500,000 in the bank earning 3 percent interest per year. -Refer to Scenario 13-1.Suppose Joe purchases the factory using $200,000 of his own money and $200,000 borrowed from a bank at an interest rate of 6 percent.What is Joe's annual opportunity cost of purchasing the factory?

The length of the short run

If the average total cost curve is falling,what is necessarily true of the marginal cost curve? If the average total cost curve is rising,what is necessarily true of the marginal cost curve?

When a firm experiences diseconomies of scale,

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

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

Table 13-13 Consider the following table of long-run total cost for four different firms: -Refer to Table 13-13.Which firm's long-run marginal cost decreases as output increases?

Table 13-4 Gallo Cork Factory -Refer to Table 13-4.Each worker at Gallo's cork factory costs $12 per hour.The cost of each machine is $20 per day regardless of the number of corks produced.What is the total daily cost of producing at a rate of 55 units per hour if Gallo's operates 8 hours per day?

In setting the production level,a firm's cost curves

Johnny is a sophomore in college and has a 1.5 cumulative grade point average (GPA).Johnny's cumulative GPA will fall even further next semester if he performs worse than

Table 13-10 Jimmy's Gigaplots Factory -Refer to Table 13-10.What is the total cost of producing 2 gigaplots at Jimmy's Gigaplot factory?

The difference between accounting profit and economic profit relates to

Table 13-7 -Refer to Table 13-7.The marginal cost of producing the sixth widget is

A total-cost curve shows the relationship between the

Scenario 13-7 Farmer Jack is a watermelon farmer.If Jack plants no seeds on his farm,he gets no harvest.If he plants 1 bag of seeds,he gets 30 watermelons.If he plants 2 bags of seeds,he gets 50 watermelons.If he plants 3 bags of seeds he gets 60 watermelons.A bag of seeds costs $100,and the costs of seeds are his only costs. -Refer to Scenario 13-7.Which of the following statements is(are)true of Farmer Jack's marginal cost?

Suppose that for a particular business there are no implicit opportunity costs.Then

Table 13-9 Teacher's Helper is a small company that has a subcontract to produce instructional materials for disabled children in public school districts.The owner rents several small rooms in an office building in the suburbs for $600 a month and has leased computer equipment that costs $480 a month. -Refer to Table 13-9.What is the average variable cost for the month if 6 instructional modules are produced?

If the marginal cost of producing the tenth unit of output is $3,and if the average total cost of producing the tenth unit of output is $2,then at ten units of output,average total cost is rising.

A difference between explicit and implicit costs is that

Table 13-4 Gallo Cork Factory -Refer to Table 13-4.Gallo's cork factory experiences diminishing marginal product of labor with the addition of which worker?