Exam 11: Technology, Production, and Costs

Figure 11-3 Fancy Footwear manufactures shoes. Figure 11-3 shows Fancy Footwear's marginal product of labor and average product of labor curves in the short run. -Refer to Figure 11-3. Which of the following statements correctly describes the curves in the figure?

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

If the total cost of producing 20 units of output is $1,000 and the average variable cost is $35, what is the firm's average fixed cost at that level of output?

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

The typical shape of an isoquant is

Is it possible for average total cost to be decreasing over a range of output where marginal cost is increasing? Briefly explain.

The slope of an isocost line determines the marginal rate of substitution.

If, after hiring the 6th worker, a firm's output falls, then the marginal product of the 6th worker is negative.

Figure 11-8 -Refer to Figure 11-8 above to answer the following questions. a. Identify the curves in the diagram. A ________________________________________ B ________________________________________ C ________________________________________ b. What is the numerical value of fixed cost when the quantity of output = 10? c. What is the numerical value of variable cost when the quantity of output = 10? d. What is the numerical value of total cost when the quantity of output = 10? e. What is the numerical value of average fixed cost when the quantity of output = 10? f. What is the numerical value of average total cost when the quantity of output = 10? g. On the graph identify the area that represents the total variable cost of production when the quantity of output = 10. h. On the graph identify the area that represents the fixed cost of production when the quantity of output = 10.

As output increases,

Figure 11-18 -Refer to Figure 11-18. A curve that connects points a, d and e is called

Article Summary Due to falling sales and lower profit margins, clothing retailer Aeropostale announced it would be closing more stores than originally planned. In August, the company announced it would be closing between 30 and 40 locations in 2013, up from the previously announced 15 to 20. Compared to the previous year, net sales fell 6 percent and the company reported a loss of $33.7 million for the second quarter of 2013, and the trend was expected to continue into the third quarter. Explaining the downturn, Aeropostale chief executive Thomas P. Johnson stated "Our business was pressured by a challenging teen retail environment with weak traffic trends and high levels of promotional activity." Source: Andrew Klips, "Aeropostale Losses Accelerate, Closing More Stores," equities.com, August 23, 2013. -Refer to the Article Summary. Use a graph to illustrate average total cost curves for Aeropostale before and after closing the 30 to 40 stores. Assume that after closing the stores, Aeropostale will be producing at minimum average total cost.

Average total cost is

Table 11-1 Table 11-1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May. -Refer to Table 11-1. What is the marginal product of the 4th worker?

A firm's cost of production is determined by all of the following except

A downward-sloping marginal product of labor curve demonstrates the law of diminishing marginal returns.

Describe how Wal-Mart has used positive technological change to manage its inventory.

Which of the following are implicit costs for a typical firm?

Improvements in inventory control represent a positive technological change because they allow firms to produce the same output with fewer inputs. In recent years, many firms have adopted an inventory system in which firms accept shipments from suppliers as close as possible to the time they will be needed. Wal-Mart has been a pioneer in using inventory control systems to this in its stores. This type of inventory system is called a ________ inventory system.

The production function shows