ECON 1311 - EXAM 2 (assignment 7)

Average fixed cost falls as output rises

Refer to Figure 11-5. Curve G approaches curve F because: - marginal cost is above average variable costs. - average fixed cost falls as output rises. - fixed cost falls as capacity rises. - total cost falls as more and more is produced.

E = marginal cost curve; F = average total cost curve; G = average variable cost curve; H = average fixed cost curve

Refer to Figure 11-5. Identify the curves in the diagram. - E = average fixed cost curve; F = variable cost curve; G = total cost curve, H = marginal cost curve - E = marginal cost curve; F = total cost curve; G = variable cost curve, H = average fixed cost curve - E = average fixed cost curve; F = average total cost curve; G = average variable cost curve, H = marginal cost curve - E = marginal cost curve; F = average total cost curve; G = average variable cost curve; H = average fixed cost curve.

Average fixed costs

Refer to Figure 11-5. The vertical difference between curves *F* and *G* measures: - average fixed costs - marginal costs - fixed costs - sunk costs

A

Refer to Figure 11-6. In the Figure above, which letter represents the marginal cost curve? - A - B - C - D

C

Refer to Figure 11-6. In the figure above, which letter represents the average variable cost curve? - A - B - C - D

10.8 pounds

Refer to Table 11-1. What is the average product of labor when the farm hires 5 workers? - 4 pounds - 10.8 pounds - 38.2 pounds - 54 pounds

$14

Refer to Table 11-7. What is the average total cost of production when the firm produces 120 lanterns? - $1,680 - $72 - $14 - $12.3

Technology

The processes a firm uses to turn inputs into outputs of goods and services is called: - technology. - technological change. - marginal analysis. - positive economic analysis.

A factory building

Which of the following is a factor of production that generally is fixed in the short run? - raw materials - labor - a factory building - water

Economic costs add the opportunity costs of a firm using its own resources while accounting costs do not

Economic costs of production differ from accounting costs in that: - economic costs include expenditures for hired resources while accounting costs do not. - economic costs add the opportunity costs of a firm using its own resources while accounting costs do not. - accounting costs include expenditures for hired resources while economic costs do not. - accounting costs are always larger than economic cost.

will increase

If another worker adds 9 units of output to a group of workers who had an average product of 7 units, then the average product of labor: - will remain the same. - will increase. - will decrease. - and what will happen to it cannot be determined.

Less than 8 chairs

If diminishing marginal returns have already set in for Golden Lark Woodworks, and the marginal product of the 6th carpenter is 8 chairs, then the marginal product of the 7th carpenter is: - negative. - less than 8 chairs. - more than 8 chairs. - zero

Average variable cost is decreasing

If the marginal cost curve is below the average variable cost curve, then: - average variable cost is increasing. - average variable cost is decreasing. - marginal cost must be decreasing. - average variable cost could either be increasing or decreasing.

$15

If the total cost of producing 20 units of output is $1,000 and the average variable cost is $35, what is the firm's average fixed cost at that level of output? - $65 - $50 - $15 - It is impossible to determine without additional information.

The non-monetary opportunity cost of using the firm's own resources

Implicit costs can be defined as: - accounting profit minus explicit cost. - the non-monetary opportunity cost of using the firm's own resources. - the deferred cost of production. - total cost minus fixed costs.

There are no fixed costs

In the long run which of the following is true? - Total cost = fixed cost + variable cost. - The size of a firm's physical plant can be changed but the firm cannot adopt new technology. - There are no fixed costs. - The firm can vary its explicit costs but not its implicit costs.

Change in total cost divided by the change in output

Marginal cost is equal to the: - change in total cost divided by the change in output. - change in average total costs divided by the change in output. - change in total product divided by the change in output. - change in average product divided by the change in output.

The 2nd worker is hired

Refer to Figure 11-1. Diminishing marginal productivity sets in after: - the 2nd worker is hired. - the 3rd worker is hired. - the 4th worker is hired. - the 5th worker is hired.

Is 17

Refer to Figure 11-1. The average product of the first four worker: - is 68 - is 17 - is 11 - cannot be determined

15

Refer to Figure 11-1. The marginal product of the 3rd worker is: - 57 - 19 - 15 - 11

-2

Refer to Figure 11-1. The marginal product of the 7th worker is: - 66 - 9.43 - 2 - (-2)

$32

Refer to Table 11-7. What is the marginal cost per unit of production when the firm produces 100 lanterns? - $420 - $32 - $11.1 - $8.1

$1,157

Refer to Table 11-7. What is the variable cost of production when the firm produces 115 lanterns? - $1,556 - $1,157 - $956 - $10.05

5 pounds

Refer to table 11-1. What is the marginal product of the 4th worker? - 137 pounds - 50 pounds - 12.5 pounds - 5 pounds

Equals total cost of production divided by the level of output

The average total cost of production: - is the extra cost required to produce one more unit. - equals the explicit cost of production. - equals total cost of production divided by the level of output. - equals total cost of production multiplied by the level of output.

To use inputs to produce outputs of goods and services

The basic activity of a firm is: - to set the prices of its products as high as possible. - to compete with other firms that produce similar products. - to provide jobs for its employees. - to use inputs to produce outputs of goods and services.

That at some point, adding more of a variable input to a given amount of a fixed input will case the marginal product of the variable input to decline

The law of diminishing marginal returns states: - that at some point, adding more of a fixed input to a given amount of variable inputs will cause the marginal product of the variable input to decline. - that in the presence of a fixed factor, at some point average product of labor starts to fall as more and more variable inputs are added. - that at some point, adding more of a variable input to a given amount of a fixed input will cause the marginal product of the variable input to decline. - average total costs of production initially fall and after some point starts to rise at a decreasing rate as output increases.

Long enough for a firm to vary all of its inputs, to adopt new technology, and change the size of its physical plant

The long run refers to a time period: - during which a firm is able to purchase all of its inputs, including its plant and equipment. - long enough for a firm to vary all of its inputs, to adopt new technology, and change the size of its physical plant. - long enough for a firm to pay all of its creditors in full. - long enough for a firm to change the use of its variable inputs.

The maximum output that can be produced from a set of inputs

The production function shows: - the total cost of producing a given quantity of output. - the maximum output that can be produced from a set of inputs. - the technology used to produce output. - the incremental output gained by improving the production process.

The marginal cost curve

The shape of the average total cost curve is determined by the shape of: - the marginal cost curve. - the average fixed cost curve. - the average product curve. - the firm's production function.

$2.40

Vipsana's Gyros House sells gyros. The cost of ingredients (pita, meat, spices, etc.) to make a gyro is $2.00. Vipsana pays her employees $60 per day. She also incurs a fixed cost of $120 per day. Calculate Vipsana's average fixed cost per day when she produces 50 gyros using two workers? - $2.00 - $2.40 - $4.40 - $6.80

$340

Vipsana's Gyros House sells gyros. The cost of ingredients (pita, meat, spices, etc.) to make a gyro is $2.00. Vipsana pays her employees $60 per day. She also incurs a fixed cost of $120 per day. Calculate Vipsana's total cost per day when she produces 50 gyros using two workers? - $100 - $124.40 - $220 - $340

$220

Vipsana's Gyros House sells gyros. The cost of ingredients (pita, meat, spices, etc.) to make a gyro is $2.00. Vipsana pays her employees $60 per day. She also incurs a fixed cost of $120 per day. Calculate Vipsana's variable cost per day when she produces 50 gyros using two workers? - $100 - $124.40 - $220 - $240

$145

When a firm produces 50,000 units of output, its total cost equals $6.5 million. When it increases its production to 70,000 units of output, its total cost increases to $9.4 million. Within this range, the marginal cost of an additional unit of output is: - $41.43. - $134.29. - $135. - $145.

The loss in the value of capital equipment due to wear and tear

Which of the following is an implicit cost of production? - the loss in the value of capital equipment due to wear and tear - the salary you pay yourself for running your business - the utility bill paid to water, electricity, and natural gas companies - the interest you pay your mother for the money she loaned you to start your business

Economic costs include both explicit costs and implicit costs

Which of the following statements is true? - An explicit cost is an actual cost; an implicit cost is a theoretical cost. - Economic costs include both explicit costs and implicit costs. - An explicit cost is more important, dollar for dollar, than an implicit cost. - Explicit costs are accounting costs, not economic costs; implicit costs are economic costs, not accounting costs.

All inputs can be varied

A characteristic of the long run is: - there are fixed inputs. - all inputs can be varied. - plant capacity cannot be increased or decreased. - there are both fixed and variable inputs.

It can produce more output using the same inputs

A firm has succesfully adopted a posotive technological change when: - it can produce more output using the same inputs - it produces less pollution in its production process - it can pay its workers less yet increase its outputs - it sees an increase in worker productivity

Extra output of an additional worker may rise at first, but eventually must fall

As a firm hires more labor in the short run, the: - level of total product stays constant. - output per worker rises. - extra output of an additional worker may rise at first, but eventually must fall. - costs of production are increasing at a fixed rate per unit of output.

Δ(TC - FC)/ΔQ

Average variable cost can be calculated using any of the formulas below except: - TVC/Q. - (TC - FC)/Q. - Δ(TC - FC)/ΔQ. - (TC/Q) - AFC.