Exam 11: Technology, Production, and Costs

Table 11-6 -Refer to Table 11-6. Alicia Gregory owns a foot massage business. She leases 4 computer-controlled massage booths, for which she pays $125 per day. She cannot increase the number machines she leases without giving the manufacturer 3 months' notice. She can hire as many workers as she wants at a cost of $75 per day per worker. These are the only two inputs she uses in her business. Use this information to fill in the columns in the above table.

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

After Suzie, owner of Suzie's Sweet Shop, hires her 8th worker the average product of labor declines. Which of the following statements must be true?

Suppose the total cost of producing 40,000 flash drives is $120,000, and the fixed cost is $30,000. a. What is the variable cost? b. When output is 40,000, what are the average variable cost and the average fixed cost? c. Assuming the cost curves have the usual shape, is the dollar difference between the average total cost and the average variable cost greater when the output is 40,000 flash drives or when the output is 60,000 flash drives? Explain.

Table 11-2 Table 11-2 summarizes production at the Crunchy Apple Orchard for the month of April 2005. -Refer to Table 11-2. What is the average product of labor when the orchard employs 5 workers?

The slope of an isoquant measures

The marginal product of labor is defined as

The slope of an isocost line ________ and equals the negative of ________.

Figure 11-2 -Refer to Figure 11-2. Diminishing returns to labor set in

Table 11-7 Table 11-7 shows cost data for Lotus Lanterns, a producer of whimsical night lights. -Refer to Table 11-7. What is the average variable cost per unit of production when the firm produces 90 lanterns?

The rate at which a firm is able to substitute one input for another while keeping the level of output constant is called the

The law of diminishing marginal returns states

The marginal product of labor is defined as

Accounting costs exclude implicit costs.

Economies of scale exist as a firm increases its size in the long run because of all of the following except

An isoquant is a curve that shows all the combinations of two inputs that will produce the same level of output.

The change in a firm's total cost from producing one more unit of a good or service is

Table 11-8 Elegant Settings manufactures stainless steel cutlery. Table 11-8 shows the company's cost data. -Which of the following statements explains the difference between diminishing returns and diseconomies of scale?

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. For what quantity of labor does production display diminishing returns?

The average total cost of production