Exam 11: Technology,production,and Costs

Stan owns a software design business.He obtained a bank loan to buy computer equipment for his business.He pays $1,000 per month for interest on the loan.He has 10 employees,each of whom is paid $4,000 per month.Because his business has been successful,next month he will increase employee wages to $5,000.If the revenue from his business remains at its current level,Stan is considering an addition to his office.Which of the following statements regarding Stan's business is false?

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

Figure 11-11 illustrates the long-run average cost curve for a firm that produces picture frames.The graph also includes short-run average cost curves for three firm sizes: ATCa,ATCb and ATCc. -Refer to Figure 11-11.If the firm chooses to produce and sell 25,000 frames per month by operating in the short run with a scale operation represented by ATCc

The law of diminishing marginal returns

Sam Lewis owns a firm in New York City's garment district.If Sam keeps adding workers to use the same number of sewing machines,eventually the workplace will become so crowded that workers will get in each other's way.At this point

In the long run,all of a firm's inputs are variable.

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

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

The marginal product of labor is calculated using the formula

Average total cost is equal to

Figure 11-1 -Refer to Figure 11-1.Diminishing marginal productivity sets in after

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

The total cost schedule shows the relationship between different amounts of inputs and the resulting level of output.

What is the marginal product of labor and what is the average product of labor.

As a firm moves to higher isocost lines

Quantity (sets) Long-Run Average Cost 100 \ 40 200 35 300 30 400 30 500 35 Elegant Settings manufactures stainless steel cutlery.Table 11-8 shows the company's cost data. -Refer to Table 11-8.Elegant Settings experiences

What is an isoquant? What is the slope of an isoquant?

If the marginal product of labor is 45 units of output and the marginal product of capital is 56 units of output while the wage rate is $20 per worker and the cost of capital is $28 per machine,are these two inputs being used in the least-cost combination and what should be done if they are not?

The long run refers to a time period

In economics,what is the difference between the short run and the long run?