Exam 7: Technology Production and Costs

Which of the following statements regarding a firm's long-run average total cost (LRATC)curve and its short-run average total cost (SRATC)curve is true?

Suppose the price of capital and labour remain constant but that the average educational level of workers has increased and therefore, productivity of labour increases.This would lead a firm

Table 7.1 Table 7.1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May. -Refer to Table 7.1.The average product of labour when the farm hires 5 workers is

Figure 7.17 -Refer to Figure 7.17.Starting from point e, a movement along the isocost to point f

Which of the following statements is true?

Table 7.8 Elegant Settings manufactures stainless steel cutlery.Table 7.8 shows the company's cost data. -Refer to Table 7.8.The minimum efficient scale of production is

Adam spent $10 000 on new equipment for his small business, 'Adam's Fitness Studio.' Membership at his fitness centre is very low and at this rate, Adam needs an additional $12 000 per year to keep his studio open.Which of the following is true?

Diminishing marginal product of labour occurs when adding another unit of labour

Maria's Yiros House sells yiros.The cost of ingredients (pita, meat, spices, etc.)to make a yiros is $2.00.Maria pays her employees $60 per day.She also incurs a fixed cost of $120 per day.What is Maria's total cost per day when she does not produce any yiros and does not hire any workers?

What is the difference between explicit costs and implicit costs? List three examples each of explicit costs and implicit costs that may be experienced by a small business. __________________________________________________________________________________________________________________________________________________________________________________________

Suppose Argyle Sachs has to choose between building a smaller sweater factory and a larger sweater factory.In the following graph, the relationship between costs and output for the smaller factory is represented by the curve ATC₁, and the relationship between costs and output for the larger factory is represented by the curve ATC₂. a.If Argyle expects to produce 3600 sweaters per month, should he build a smaller factory or a larger factory? Briefly explain. b.If Argyle expects to produce 5000 sweaters per month, should he build a smaller factory or a larger factory? Briefly explain. c.If the average cost of producing sweaters is lower in the larger factory when Argyle produces 6500 sweaters per week, why isn't it also lower when Argyle produces 4000 sweaters per week? __________________________________________________________________________________________________________________________________________________________________________________________

Which of the following is an implicit cost of production?

Describe the relationship between marginal cost and average total cost. __________________________________________________________________________________________________________________________________________________________________________________________

If the firm is producing no output in the short run, then its total costs are zero.

Marginal cost is calculated for a particular increase in output by

Average fixed costs of production

As output increases, the distance between average total cost and average variable cost increases.

Which of the following describes how output changes in the short run? Because of specialisation and the division of labour, as more workers are hired

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 fixed cost curve?

Which of the following statements explains the difference between diminishing returns and diseconomies of scale?