Exam 6: Technology,production and Costs

Table 6.8 Quantity (sets) Long Run Average Cost (dollars) 100 40 200 35 300 30 400 30 500 35 Elegant Settings manufactures stainless steel cutlery. Table 6.8 shows the company's cost data. -Refer to Table 6.8.Elegant Settings experiences _________.

Are the costs of utilities always fixed,always variable,or can they be both? Briefly explain. __________________________________________________________________________________________________________________________________________________________________________________________

In the long run,which of the following is true?

If the marginal product of labour is decreasing,then marginal cost of production must be rising.

If average total cost is falling,marginal cost must also be falling.

Table 6.7 Quantity of Lanterns Fixed Cost (dollars) Variable Cost (dollars) Total Cost (dollars) Average Total Cost (dollars) 75 200 170 370 4.93 80 200 230 430 5.36 90 200 7.67 100 200 810 115 200 11.8 117 200 1264 1464 12.5 120 200 1480 Table 6.7 shows cost data for Lotus Lanterns, a producer of whimsical night lights. -Refer to Table 6.7.The variable cost of production when the firm produces 115 lanterns is ________.

How do economic costs of production differ from accounting costs?

Which of the following is an implicit cost of production?

Figure 6.2 -Refer to Figure 6.2.The curve labelled 'E' is _________.

Table 6.7 Quantity of Lanterns Fixed Cost (dollars) Variable Cost (dollars) Total Cost (dollars) Average Total Cost (dollars) 75 200 170 370 4.93 80 200 230 430 5.36 90 200 7.67 100 200 810 115 200 11.8 117 200 1264 1464 12.5 120 200 1480 Table 6.7 shows cost data for Lotus Lanterns, a producer of whimsical night lights. -Refer to Table 6.7.The average total cost of production when the firm produces 120 lanterns is _________.

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?

If an airport decides to expand by building an additional passenger terminal,and in doing so it lowers its average cost per airplane landing,it was previously operating at _________.

Which of the following equations is correct?

Table 6.9 Fixed Cost (dollars) Average Variable Cost (dollars) Small plant 10000 2.00 Medium plant 15000 1.30 Large plant 25000 0.50 -Refer to Table 6.9.Clock It To Me manufactures clock radios.The table above shows estimates of fixed cost per period and average variable cost for three possible plant sizes. a.You are employed as the company's cost accountant and have been asked to prepare cost estimates for various output levels for each of the three possible plant sizes.Record your calculations in the table below. Average Cost of Production Clock Radios Clock Radios 000 Clock Radios Small plant Medium plant Large plant b.For each of the three output levels,which plant size will generate the lowest average total cost of production? c.Suppose the firm currently sells 8 000 clock radios per period (using the optimal plant size for this output level).Now,however,it has just secured a long-term contract to supply 20 000 clock radios per period.In the short run,what is the average total cost of producing 20 000 clock radios? Provide a numerical value based on your answer in part a. d.What happens to average total cost of production in the long run? Provide a numerical value based on your answer in part a. __________________________________________________________________________________________________________________________________________________________________________________________

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?

Figure 6.7 Figure 6.7 shows the cost structure for a firm. -Refer to Figure 6.7.When the output level is 100 units,what is average fixed cost?

The law of diminishing marginal returns _________.

Figure 6.2 -Refer to Figure 6.2.The curve labelled 'F' is __________.

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

Which of the following is a reason why a firm would experience diseconomies of scale?