Graded Homework - Chapter 11

(Table: Costs of Producing Bagels) Look at the table Cost of Producing Bagels. The total cost of producing 2 bagels is: $0.20. $0.10. $0.50. $0.40.

$0.40.

(Table: Cakes) Look at the table Cakes. Pat is opening a bakery to make and sell special birthday cakes. She is trying to decide how many mixers to purchase. Her estimated fixed and average variable costs if she purchases one, two, or three mixers are shown in the table. Assume that average variable costs do not vary with the quantity of output. If Pat purchases one mixer and bakes 200 cakes per day, what is her average fixed cost? $5 $10 $200 $1,000

$5

A business produces 10 pairs of eyeglasses. It incurs $30 in average variable cost and $35 in average total cost. The total fixed cost of producing 10 pairs of eyeglasses is: $3. $300. $50. $35.

$50.

(Table: Total Product and Marginal Product) Look at the table Total Product and Marginal Product. The marginal product of the second worker is: 20. 30. 10. 15.

20.

(Table: Production of Bagels) Look at the table Production of Bagels. The marginal product of the fifth worker is _____ bagels. 10,000 12,000 5,000 9,000

9,000

(Problem 3b). The production function for Marty's Frozen Yogurt is given in the table below. Marty pays each of his workers $80 per day. The cost of his other variable inputs is $0.50 per cup of yogurt. His fixed cost is $100 per day. The diagram shows Marty's variable cost curve and his total cost curve. Correctly identify each curve. A. Curve A is the variable cost curve and Curve B is the fixed cost curve. B. Curve A is the total cost curve and Curve B is the variable cost curve. C. Curve B is the total cost curve and Curve A is the variable cost curve. D. Curve A is the total cost curve and Curve B is the marginal cost curve.

B. Curve A is the total cost curve and Curve B is the variable cost curve.

(Figure and Table: Variable, Fixed, and Total Costs) Look at the figure and table Variable, Fixed, and Total Costs. The marginal cost of increasing production from 51 to 64 bushels of wheat is: $12.50. $18.75. $15.38. $16.00.

$15.38.

(Figure: Short-Run Costs II) Look at the figure Short-Run Costs II. At 6 units of output, marginal cost is approximately: $100. $250. $120. $200.

$200.

(Table: Cost Data) Look at the table Cost Data. The average variable cost of producing 5 purses is: $190. $48. $38. $10.

$38.

(Problem 15a). Wolfsburg Wagon (WW) is a small automaker. The accompanying table shows WW's long-run average total cost. For which levels of output does WW experience increasing returns to scale? A. between 6 and 8 cars B. greater than 8 cars C. between 4 and 6 cars D. between 1 and 4 cars

A. between 6 and 8 cars (WRONG)

The following diagram shows the marginal cost (MC), average variable cost (AVC) and average total cost (ATC) curves for the telemarketing company, Northwest Survey and Data Services. Select each curve and then choose the correct label from the legend.

ATC = First curve (top curve) AVC = second curve (Middle curve) MC = third curve or (bottom curve)

(Problem 4b). Marty's Frozen Yogurt is a small shop that sells cups of frozen yogurt in a university town. Marty owns three frozen-yogurt machines. His other inputs are refrigerators, frozen-yogurt mix, cups, sprinkle toppings, and, of course, workers. He estimates that his daily production function when he varies the number of workers employed (and at the same time, of course, yogurt mix, cups, and so on) is as shown in the accompanying table. Marty pays each of his workers $80 per day. The cost of his other variable inputs is $0.50 per cup of yogurt. His fixed cost is $100 per day. The diagram shows the AFC, AVC, and ATC curves. Choose the statement that correctly identifies the curves. A. Curve A is the AVC curve. B. Curve A is the ATC curve. C. Curve C is the AVC curve. D. Curve B is the ATC curve.

B. Curve A is the ATC curve.

(Problem 15c). Wolfsburg Wagon (WW) is a small automaker. The accompanying table shows WW's long-run average total cost. For which levels of output does WW experience constant returns to scale? A. greater than 8 cars B. between 4 and 6 cars C. between 6 and 8 cars D. between 1 and 4 cars

B. between 4 and 6 cars

(Problem 4a). Marty's Frozen Yogurt is a small shop that sells cups of frozen yogurt in a university town. Marty owns three frozen-yogurt machines. His other inputs are refrigerators, frozen-yogurt mix, cups, sprinkle toppings, and, of course, workers. He estimates that his daily production function when he varies the number of workers employed (and at the same time, of course, yogurt mix, cups, and so on) is as shown in the accompanying table. Marty pays each of his workers $80 per day. The cost of his other variable inputs is $0.50 per cup of yogurt. His fixed cost is $100 per day. For the given level of output, calculate the average fixed cost (AFC), average variable cost (AVC), and average total cost (ATC) per cup of frozen yogurt. When 270 cups are produced, AFC is _____, AVC is _____, and ATC is _____. A. $0.37; $1.76; $1.39 B. $0.33; $1.35; $1.74 C. $0.37; $1.39; $1.76 D. $0.33; $1.39; $1.76

C. $0.37; $1.39; $1.76

(Problem 4c). Marty's Frozen Yogurt is a small shop that sells cups of frozen yogurt in a university town. Marty owns three frozen-yogurt machines. His other inputs are refrigerators, frozen-yogurt mix, cups, sprinkle toppings, and, of course, workers. He estimates that his daily production function when he varies the number of workers employed (and at the same time, of course, yogurt mix, cups, and so on) is as shown in the accompanying table. Marty pays each of his workers $80 per day. The cost of his other variable inputs is $0.50 per cup of yogurt. His fixed cost is $100 per day. What principle explains why the AFC declines as output increases? What principle explains why the AVC increases as output increases? A. AFC declines due to the diminishing returns effect; AVC increases due to the spreading effect. B. Both AFC and AVC decline due to the spreading effect. C. AFC declines due to the spreading effect; AVC increases due to the diminishing returns effect. D. Both AFC and AVC increase due to the diminishing returns effect.

C. AFC declines due to the spreading effect; AVC increases due to the diminishing returns effect.

(Problem 3c). The production function for Marty's Frozen Yogurt is given in the table below. Marty pays each of his workers $80 per day. The cost of his other variable inputs is $0.50 per cup of yogurt. His fixed cost is $100 per day. What is the marginal cost per cup for the first 110 cups of yogurt? For the next 90 cups? A. Marginal cost for the first 110 cups of yogurt is $1.39 per cup, and then falls to $1.23 per cup for the next 90 cups. B. Marginal cost for the first 110 cups of yogurt is $1.23 per cup, and then rises to $1.64 per cup for the next 90 cups. C. Marginal cost for the first 110 cups of yogurt is $135, and then falls to $125 for the next 90 cups. D. Marginal cost for the first 110 cups of yogurt is $1.23 per cup, and then rises to $1.39 per cup for the next 90 cups.

C. Marginal cost for the first 110 cups of yogurt is $135, and then falls to $125 for the next 90 cups. (WRONG)

(Problem 3a). The production function for Marty's Frozen Yogurt is given in the table below. Marty pays each of his workers $80 per day. The cost of his other variable inputs is $0.50 per cup of yogurt. His fixed cost is $100 per day. What is Marty's variable cost and total cost when he produces 110 cups of yogurt? A. When he produces 110 cups of yogurt, Marty's variable cost is $80 and his total cost is $180. B. When he produces 110 cups of yogurt, Marty's variable cost is $135 and his total cost is $235. C. When he produces 110 cups of yogurt, Marty's variable cost is $55 and his total cost is $155. D. When he produces 110 cups of yogurt, Marty's variable cost is $80 and his total cost is $235.

C. When he produces 110 cups of yogurt, Marty's variable cost is $55 and his total cost is $155. (WRONG)

(Problem 2a). Marty's Frozen Yogurt is a small shop that sells cups of frozen yogurt in a university town. Marty owns three frozen-yogurt machines. His other inputs are refrigerators, frozen-yogurt mix, cups, sprinkle toppings, and, of course, workers. He estimates that his daily production function when he varies the number of workers employed (and at the same time, of course, yogurt mix, cups, and so on) is as shown in the accompanying table. What are the fixed inputs and variable inputs in the production of cups of frozen yogurt? Choose the correct statement. A. Frozen-yogurt machines are a variable input. B. Frozen-yogurt mix is a fixed input. C. Workers are a fixed input. D. Frozen-yogurt machines are a fixed input.

D. Frozen-yogurt machines are a fixed input.

(Problem 2c). Marty's Frozen Yogurt is a small shop that sells cups of frozen yogurt in a university town. Marty owns three frozen-yogurt machines. His other inputs are refrigerators, frozen-yogurt mix, cups, sprinkle toppings, and, of course, workers. He estimates that his daily production function when he varies the number of workers employed (and at the same time, of course, yogurt mix, cups, and so on) is as shown in the accompanying table. What is the marginal product of the first worker? The second worker? The third worker? Why does the marginal product of labor (MPL) decline as the number of workers increases? A. The marginal product of labor is 110 cups for the first worker, 90 cups for the second worker, and 70 cups for the third worker. The MPL declines due to the principle of spreading the overhead. B. The marginal product of labor is 70 cups for the first worker, 90 cups for the second worker, and 110 cups for the third worker. The MPL increases due to the principle of diminishing returns to labor. C. The marginal product of labor is 110 cups for the first worker, 70 cups for the second worker, and 90 cups for the third worker. The MPL declines due to the principle of diminishing returns to labor. D. The marginal product of labor is 110 cups for the first worker, 90 cups for the second worker, and 70 cups for the third worker. The MPL declines due to the principle of diminishing returns to labor.

D. The marginal product of labor is 110 cups for the first worker, 90 cups for the second worker, and 70 cups for the third worker. The MPL declines due to the principle of diminishing returns to labor.

(Problem 15b). Wolfsburg Wagon (WW) is a small automaker. The accompanying table shows WW's long-run average total cost. For which levels of output does WW experience decreasing returns to scale? A. between 4 and 6 cars B. between 6 and 8 cars C. greater than 8 cars D. between 1 and 4 cars

D. between 1 and 4 cars (WRONG)

Marginal cost _____ over the range of increasing marginal returns and _____ over the range of diminishing marginal returns. is constant; decreases decreases; increases increases; is constant increases; decreases

decreases; increases

In the short run, the average total cost curve slopes upward because of: diseconomies of scale. economies of scale. diminishing returns. increasing returns.

diminishing returns.

When marginal cost is BELOW average variable cost, average variable cost must be: at its maximum. falling. at its minimum. rising.

falling.

Once diminishing returns have set in, as output increases, the total cost curve: gets steeper. becomes horizontal. increases at first, and then decreases. gets flatter.

gets steeper.

If your firm is operating in the negatively sloped portion of a long-run average total cost curve, then your production exhibits: higher wages. increased input prices. decreasing returns to scale. increasing returns to scale.

increasing returns to scale.

You own a deli. Which of the following is most likely a fixed input at your deli? the tomato sauce used to make soups the dining room the bread used to make sandwiches the employees

the dining room

The total cost curve for a snowmobile dealership shows how _____ cost depends on the quantity of _____. marginal; output total; output average; variable inputs total; fixed inputs

total; output

Buford Bus Manufacturing installs a new assembly line. As a result, the output per worker increases. The marginal cost of output at Buford: will increase (the MC curve will shift up). is at its maximum. will decrease (the MC curve will shift down). will be unchanged.

will decrease (the MC curve will shift down).