Exam 7: Technology , Production and Costs

Stan owns a software design business. He obtained a bank loan to buy computer equipment for his business. He pays $1000 per month for interest on the loan. He has 10 employees, each of whom is paid $4000 per month. Because his business has been successful, next month he will increase employee wages to $5000. If the revenue from his business remains at its current level, Stan is considering an addition to his office. Which of the following statements regarding Stan's business is false?

The processes a firm uses to turn inputs into outputs of goods and services is called

A firm's expansion path

Explain whether each of the following is a fixed cost or a variable cost for Damian Dandridge's tattoo parlor. a. The payment he makes to buy tattoo ink. b. The wages he pays his employees. c. The $500-per-month payment he makes to advertise his shop on highway billboards. d. The lease payment he makes to the landlord who owns the building where his shop is located. e. The payment he makes on his liability insurance policy.

The total cost schedule shows the relationship between different amounts of inputs and the resulting level of output.

Which of the following is an implicit cost of production?

-Refer to Figure 7-2. The curve labeled 'E' is

The short run is the time period during which a firm has at least one input constraint.

As a firm moves to higher isocost lines,

When the average total cost is $16 and the total cost is $800, then the number of units the firm is producing is

If the 15th unit of output has a marginal cost of $29.50 and the average cost of producing 14 units of output is $30.23, what will happen to the average cost of production if the 15th unit is produced?

-Refer to Figure 7-1. The marginal product of the 3rd worker is

Which of the following statements is true?

-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?

If a firm experiences positive technological change, it is able to produce more output using the same inputs.

-Refer to Figure 7-5. Curve G approaches curve F because

-Refer to Figure 7-7. If output is 100 units, what is the fixed cost of production?

When the marginal product of labour rises

If we have information about workers' marginal products, then total and average product can be found by

Use the general relationship between marginal and average values to explain why a marginal cost curve must intersect an average total cost curve and an average variable cost curve at their minimum points.