Exam 7: Production Costs

A young chef is considering opening his own sushi bar. To do so, he would have to quit his current job, which pays $20 000 a year, and take over a store building that he owns and currently rents to his brother for $6000 a year. His expenses at the sushi bar would be $50 000, for food and $2000 for gas and electricity. What are his implicit costs?

The marginal cost:

Which of the following statements is true?

Narrbegin Exhibit 6.6 Cost schedule for firm X $\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Output } \\\text { quantity }\end{array} & \begin{array} { c } \text { Total Exed } \\\text { cost (\$) }\end{array} & \begin{array} { c } \text { Total variable } \\\text { cost (\$) }\end{array} \\\hline 0 & 100 & 0 \\\hline 1 & 100 & 50 \\\hline 2 & 100 & 84 \\\hline 3 & 100 & 108 \\\hline 4 & 100 & 127 \\\hline 5 & 100 & 150 \\\hline\end{array}$ -As shown in Exhibit 6.6, the average fixed cost of producing the fifth unit is:

The maximum marginal product corresponds with:

If the total variable cost of producing five units of output is $10 and the total variable cost of producing six units is $15, the marginal cost of producing the sixth unit is $5.

ATC can be calculated as follows:

In the long run, total fixed cost:

Economies of scale are created by greater efficiency of capital and by:

Which of the following is true at the point where diminishing returns set in?

Narrbegin Exhibit 6.5 Cost schedule for a firm $\begin{array} { | c | c | c | } \hline \text { Quantity } & \text { Tatal cost (\$) } & \text { Marginal cost (\$) } \\\hline 0 & 200 & \\\hline 1 & 900 & \\\hline 2 & & 900 \\\hline 3 & 3000 & \\\hline\end{array}$ -In Exhibit 6.5, by filling in the blanks it can be determined that the fixed costs for the second unit are

The marginal product curve reflects the change in:

Narrbegin Exhibit 6.6 Cost schedule for firm X $\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Output } \\\text { quantity }\end{array} & \begin{array} { c } \text { Total Exed } \\\text { cost (\$) }\end{array} & \begin{array} { c } \text { Total variable } \\\text { cost (\$) }\end{array} \\\hline 0 & 100 & 0 \\\hline 1 & 100 & 50 \\\hline 2 & 100 & 84 \\\hline 3 & 100 & 108 \\\hline 4 & 100 & 127 \\\hline 5 & 100 & 150 \\\hline\end{array}$ -As shown in Exhibit 6.6, the average total cost of producing five units is:

Narrbegin Exhibit 6.6 Cost schedule for firm X $\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Output } \\\text { quantity }\end{array} & \begin{array} { c } \text { Total Exed } \\\text { cost (\$) }\end{array} & \begin{array} { c } \text { Total variable } \\\text { cost (\$) }\end{array} \\\hline 0 & 100 & 0 \\\hline 1 & 100 & 50 \\\hline 2 & 100 & 84 \\\hline 3 & 100 & 108 \\\hline 4 & 100 & 127 \\\hline 5 & 100 & 150 \\\hline\end{array}$ -As shown in Exhibit 6.6, the marginal cost of producing the fourth unit is:

Suppose a firm has total revenue of $500 million, explicit costs of $200 million and implicit costs of $100 million. This firm's economic profit is:

Narrbegin Exhibit 6.9 Cost curves -In Exhibit 6.9, a firm finds that it is experiencing numerous managerial and information problems. The position of its short-run and long-run average total cost curves suggest that it is operating at a production level:

The short-run production function is based on the assumption that:

Which of the following statements is not true?

Narrbegin Exhibit 6.3 A marginal product curve -As shown in Exhibit 6.3, the law of diminishing returns applies where there are:

Narrbegin Exhibit 6.5 Cost schedule for a firm $\begin{array} { | c | c | c | } \hline \text { Quantity } & \text { Tatal cost (\$) } & \text { Marginal cost (\$) } \\\hline 0 & 200 & \\\hline 1 & 900 & \\\hline 2 & & 900 \\\hline 3 & 3000 & \\\hline\end{array}$ -In Exhibit 6.5, by filling in the blanks it can be determined the variable costs for the first unit are: