Exam 13: The Costs of Production

Suppose that a firm's long­run average total costs of producing custom wooden picnic tables is $300 when it produces 10,000 tables and $325 when it produces 11,000 tables. For this range of output, the firm is experiencing

Table 13-18 -Refer to Table 13-18. What is the shape of the firm's total­cost curve?

When a firm experiences diseconomies of scale,

The average-total-cost curve is unaffected by diminishing marginal product.

If Danielle sells 300 wrist bands for $0.50 each, her total revenues are

How long does it take a firm to go from the short run to the long run?

Table 13-2 -Refer to Table 13-2. At which number of workers does diminishing marginal product begin?

Table 13-19 -Refer to Table 13-19. What is the shape of the average-total-cost curve?

When a firm's long­run average total costs do not vary as output increases, the firm exhibits

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

Scenario 13-6 Ziva is an organic lettuce farmer, but she also spends part of her day as a professional organizing consultant. As a consultant, Ziva helps people organize their houses. Due to the popularity of her home-organization services, Farmer Ziva has more clients requesting her services than she has time to help if she maintains her farming business. Farmer Ziva charges $25 an hour for her home-organization services. One spring day, Ziva spends 10 hours in her fields planting $130 worth of seeds on her farm. She expects that the seeds she planted will yield $300 worth of lettuce. -Refer to Scenario 13-6. An economist would calculate Ziva's total cost of farming to equal

Scenario 13-10 Jessica makes photo frames. She spends $5 on the materials for each photo frame. She can create one photo frame in an hour. She earns $10 per hour at a part-time job at the local coffee shop. She can sell a photo frame for $30 each. -Refer to Scenario 13-10. An economist would calculate the total cost for one photo frame to be

Table 13-18 -Refer to Table 13-18. What is the marginal product of the sixth worker?

An example of an explicit cost of production would be the

Table 13-18 -Refer to Table 13-18. What is the marginal product of the third worker?

When a firm is experiencing economies of scale, long-run

Economists in the field of industrial organization study how

If a firm experiences constant returns to scale at all output levels, then its long-run average total cost curve would

Which of the following statements about a production function is correct for a firm that uses labor to produce output?

Suppose that a firm's long­run average total costs of producing televisions decreases as it produces between 10,000 and 20,000 televisions. For this range of output, the firm is experiencing