Exam 7: Technology , Production and Costs

If the total cost of producing 20 units of output is $1000 and the average variable cost is $35, what is the firm's average fixed cost at that level of output?

An isocost line shows

A characteristic of the long run that is not available in the short run is that a firm is free to vary its output.

As output increases,

The explicit cost of production is also called

The minimum efficient scale is

-Refer to Figure 7-9 above to solve the following problems. a. Calculate the fixed cost of production. b. Calculate the average total cost of production when the firm produces 20 units of output. c. Calculate the average variable cost of production when the firm produces 20 units of output. d. Calculate the average fixed cost of production when the firm produces 20 units of output. e. Calculate the average fixed cost of production when the firm produces 15 units of output. f. If the firm increases output from 15 to 20 units what is the marginal cost of output?

If production displays increasing marginal returns, then

If a firm is experiencing diseconomies of scale, its long-run average cost curve is increasing.

Marginal cost is the

If marginal cost is above the average variable cost, then average variable cost is decreasing.

Which of the following statements is true?

An explicit cost is defined as

Explain why the marginal cost of production must increase if the marginal product of a variable resource is decreasing.

-Refer to Figure 7-6. In the figure above, which letter represents the average total cost curve?

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?

Suppose two countries use different combinations of inputs, such as labour and capital, to produce the same product. This implies all of the following except that

In the long run, the relevant cost is total cost.

If marginal product is greater than average product, then

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