Exam 7: Technology Production and Costs

Figure 7.13 -Refer to Figure 7.13.The lines shown in the diagram are isocost lines.If the price of labour is $50 per unit, what is the price of capital along the isocost CE?

The slope of a typical isoquant is negative because to produce a given output, a producer

Figure 7.17 -Refer to Figure 7.17.Starting from point d, a movement along isoquant₁ to point f

Jennifer Borts moves her office from the premises she rents at a local shopping centre to her home.As a result of this move

Which of the following are implicit costs for a typical firm?

If the average variable cost curve is above the marginal cost curve, then

Figure 7.5 -Refer to Figure 7.5.Curve G approaches curve F because

Sally quit her job as an auto mechanic earning $50 000 per year to start her own business.To save money, she operates her business out of a small building she owns which, until she started her own business, she had rented out for $10 000 per year.She also invested her $20 000 savings (which earned a market interest rate of 5% per year)in her business.You are given the following information about the first year of her operations. a.Calculate her economic costs. b.Calculate her accounting costs. c.Calculate her implicit costs. d.Sally tells you that she would really like to move to a location closer to town but she decided against it because 'right now I don't pay any rent and it will cost me $10 000 a year to rent near town.' Do you agree with her reasoning? __________________________________________________________________________________________________________________________________________________________________________________________

Explain how the listed events (a-d)would affect the following at Hilton Hotels. i.Marginal cost ii.Average variable cost iii.Average fixed cost iv.Average total cost a.Hilton decides on an across-the-board 5 per cent increase in executive salaries. b.Hilton decides to eliminate all print advertising. c.Hilton signs a new contract with the Culinary Workers Union that requires the company to increase wages for all its kitchen workers. d.The federal government starts to levy a $5 room tax on all hotel rooms. __________________________________________________________________________________________________________________________________________________________________________________________

If four workers can product 18 chairs a day and five can produce 20 chairs a day, what is the marginal product of the fifth worker?

Figure 7.12 -Refer to Figure 7.12.Which of the following statements about the input combinations shown in the diagram is false?

Figure 7.6 Figure 7.6 contains information about the short-run cost structure of a firm. -Refer to Figure 7.6.In the figure above, which letter represents the average total cost curve?

Costs that change as output changes are called incremental costs.

Which of the following is true if production displays increasing marginal returns?

If a producer is not able to expand its plant capacity immediately, it is

If fixed costs do not change, then marginal cost

As a firm moves to higher isocost lines,

Table 7.2 Table 7.2 summarises production at the Crunchy Apple Orchard for the month of April 2005. -Refer to Table 7.2.The average product of labour when the orchard employs 5 workers is

Which of the following is an example of market 'production,' as used by economists?

The ABC Company manufactures routers that are used to provide high-speed Internet service.ABC sells an average of 1000 routers each month, but to exhaust economies of scale in its industry, ABC would have to sell 3000 routers each month.Therefore,