Exam 6: Production and Costs

Kelly, who grows geraniums to sell, is currently producing a level of output at which her marginal cost equals her average variable cost.What must be true about Kelly's average variable cost at this level of output?

Cassie produces and sells 400 jars of homemade jelly each month for $3 each.Each month, she pays $200 for jars, $150 for ingredients, and uses her own time, with an opportunity cost of $300.Her economic profits each month are:

Table 6-C A factory producing CD players finds that its output varies with the number of workers employed each week in the following way: Number af Warkers Output (CD Players) Emplayed Per Week 1 16 2 38 3 68 4 94 5 112 6 122 -Refer to Table 6-C.The marginal product of the fifth worker hired is:

Figure 7-H -One would expect to observe a diminishing marginal product of labor when crowded office space reduces the productivity of new workers.

In the long-run, the firm can only expand output by adding more variable inputs (workers and raw materials).

An economic profit of zero implies:

When there are economies of scale in production:

Table 6-B Units af Output Variable Cast (dallars) Tatal Cast (dollars) Marginal Cast (dallars) 0 0 40 1 30 70 30 2 50 90 20 3 60 100 10 4 80 120 20 5 105 145 25 6 150 190 45 -Refer to Table 6-B.How much are average fixed costs (in dollars) at 4 units of output?

According to diminishing marginal product, if all the inputs to a firm are increased in equal proportions,

Figure 7-H -The period of time that is too short for the firm to change the quantity of certain resources used in production, known as fixed inputs, is called the short run.

Assuming fixed costs are positive, over a range of output in which average total costs were constant,

Figure 6-A -Refer to Figure 6-A.What is the marginal product of the fifth worker hired each week?

If Randy's fixed cost totals $800 with variable cost per unit of $10 at a quantity of 100 units, what would his average total cost equal?

Diseconomies of scale are most likely at very low levels of output.

Figure 7-H -The total fixed cost of operating a lumberyard equals $12,000 this year.The average fixed cost of the lumberyard will not be affected by the quantity of lumber that is sold.

Economic profits will take into account:

Figure 6-B -Refer to Figure 6-B.At a quantity of five units of output, ____ represents total cost, ____ represents total fixed cost, and ____ represents total variable cost.

Economic profits will exist:

Accounting profits are calculated based upon:

Figure 6-F -From the firm's perspective, is an accounting profit of zero a good result, a bad result, or merely a satisfactory result? Why? Is an economic profit of zero a good result, a bad result, or merely a satisfactory result? Why?