Econ Exam 4

A pizza business has the cost structure described in the table. The firm's fixed costs are $20 per day. Output (pizzas per day)Total cost of output (fixed + variable)0$205$8010$12015$15020$17525$19530$21035$23040$255 What are the firm's average total costs at an output of 10 pizzas?

$12

In the example presented by this graph, what is total output when the fifth worker is added?

52 meals served per hour

The term market failure refers to

a market that fails to allocate resources efficiently.

The marginal cost curve

intersects the ATC at its minimum point.

Which of the following is a factor of production?

capital

Suppose visitors can enter the local park free of charge, but frequently all the picnic tables in the park are in use. As a result, we can say that the park is a

common-resource good.

Which two goods are opposites both when it comes to consumption and when it comes to excludability?

common-resource goods and club goods

When a firm increased its output by 25%, the cost of its inputs increased by 40%. This firm experienced

diseconomies of scale.

Explicit costs are called __________ costs, and implicit costs are __________ costs.

out-of-pocket; opportunity

Laronda went into the business of producing and selling greeting cards. For this business, which of the following is likely to be a fixed cost?

the 6-month lease for the factory

Which of the following is a solution to negative externalities?

taxes

The following table lists costs for producing Big Macs, a product of McDonald's. Based on the table, what are total fixed costs associated with Big Mac production?

$100

The cookie company in the mall hires workers to produce cookies. The workers are paid $75 per day, and the cost of renting the space in the mall is $250 per day. Number of workersDaily output (cookies)1200240036004700 If two workers are hired, the variable costs are

$150

The cookie company in the mall hires workers to produce cookies. The workers are paid $75 per day, and the cost of renting the space in the mall is $250 per day. Number of workersDaily output (cookies)1200240036004700 The fixed costs of production are

$250

Billy Bob runs a seafood restaurant. Last year he earned $50,000 in revenue. He had explicit costs of $20,000. Billy Bob could have made $30,000 working for the county and could have received an additional $20,000 if he rented out his building and equipment. Calculate Billy Bob's accounting profit.

$30,000

A pizza business has the cost structure described in the table. The firm's fixed costs are $20 per day. Output (pizzas per day)Total cost of output (fixed + variable)0$205$8010$12015$15020$17525$19530$21035$23040$255 What are the firm's average fixed costs at an output of five pizzas?

$4

A pizza business has the cost structure described in the table. The firm's fixed costs are $20 per day. Output (pizzas per day)Total cost of output (fixed + variable)0$205$8010$12015$15020$17525$19530$21035$23040$255 What are the firm's marginal costs at an output of 35 pizzas?

$4.00

The cookie company in the mall hires workers to produce cookies. The workers are paid $75 per day, and the cost of renting the space in the mall is $250 per day. Number of workersDaily output (cookies)1200240036004700 The total costs when three workers are hired is

$475

Billy Bob runs a seafood restaurant. Last year he earned $50,000 in revenue. He had explicit costs of $20,000. Billy Bob could have made $30,000 working for the county and could have received an additional $20,000 if he rented out his building and equipment. Calculate Billy Bob's implicit costs.

$50,000

A pizza business has the cost structure described in the table. The firm's fixed costs are $20 per day. Output (pizzas per day)Total cost of output (fixed + variable)0$205$8010$12015$15020$17525$19530$21035$23040$255 What are the firm's average variable costs at an output of 25 pizzas?

$7.00

Billy Bob runs a seafood restaurant. Last year he earned $50,000 in revenue. He had explicit costs of $20,000. Billy Bob could have made $30,000 working for the county and could have received an additional $20,000 if he rented out his building and equipment. Calculate Billy Bob's economic profit.

-$20,000

A semiprofessional baseball team near your town plays two home games each month at the local baseball park. They split the concessions 50/50 with the city, but keep revenue from ticket sales for themselves. The city charges the team $100 each month for the 3-month season. The team pays the players and manager a total of $1,000 a month. The team charges $10 for each ticket, and the average customer spends $7 at the concession stand. Attendance averages 30 people at each home game.In order to break even, how many tickets does the team need to sell for each game?

41

Which of the following is an example of market failure?

A river is polluted by a local fertilizer plant.

As a waiter you earn $60,000 per year, including tips. Someone offers you a new job as an economic consultant, which pays $100,000 per year. In order to be a consultant, you'll need to rent an office and purchase supplies and new computer equipment. We can conclude which of the following?

If the explicit cost for the consulting job is $25,000 per year, your economic profit is equal to $15,000.

Which of the following statements is true?

The AFC curve can never rise.

In most areas, developers are required to submit environmental impact studies before work can begin on new construction projects. Suppose that a commercial developer wants to build a new shopping center on an environmentally protected piece of property that is home to a rare three-eyed toad. The shopping complex, if approved by the local planning commission, will cover 10 acres. The planning commission wants construction to go forward, since that means additional jobs for the local community, but it also wants to be environmentally responsible. One member of the commission suggests that the developer relocate the toads. She describes the relocation process as follows: "The developer builds the shopping mall and agrees to create 10 acres of artificial toad habitat elsewhere." The builder will agree with the proposed solution under what circumstances?

The benefits of building the shopping center outweigh the costs, including that of relocating the toads.

Which of the following is a common solution to the free-rider problem?

The government provides the good and then pays for its production through taxation.

Under which of the following scenarios would a park be considered a public good?

Visitors can enter the park free of charge, and there are always plenty of empty picnic tables.

Which of the following activities create positive externalities?

You and your friends volunteer to plant wildflowers along the local highway.

Which of the following is a club good?

a swimming pool

Which of the following is an explicit cost for a business owner?

a worker's salary

Dasenbrock and Gauss, a farming company, is able to achieve huge cost savings as it increases its acreage. This would be referred to in economics as

achieving economies of scale.

The following table shows a short-run production function for laptop computers. Use the data to determine where diminishing product begins. Number of workersTotal output of laptop computers001502120320042605310632573208310 Diminishing product begins after you hire worker number

four

In the example presented by this graph, at what number of workers does the point of diminishing marginal product occur?

fourth worker

In the case of negative externalities, social costs are __________ internal costs.

greater than

Diminishing marginal product refers to marginal product that often initially __________ but eventually __________.

increases; decreases

Where there are established, well-defined private property rights, externalities will be

less prevalent.

Common resources are associated with the incentive to

neglect

Copyright laws make the digital music you buy

nonrival and excludable.

Which antipollution policy does NOT consider cost-benefit analysis?

passing a law that bans all pollution

Which of the following is an example of a private good?

pizza

Which of the following is NOT an example of a public good?

pools

Which of the following is incentivized by private property rights?

property maintenance

Cost-benefit analysis is used to determine whether the benefits of providing a __________ outweigh the costs.

public good

The local ice cream shop is trying to figure out how many workers to hire, and part of the decision will be based on the marginal product of labor. The following table shows a short-run production function for quantity of ice cream tubs produced. Diminishing marginal returns begins after hiring which worker? Workers hiredQuantity of ice cream tubs produced1110220032704300532063307300

second

Externalities are

sometimes negative and sometimes positive.

The increasing returns to hiring the first workers exist because of

specialization.

Profits and losses are determined by

subtracting total costs from total revenue.

The tragedy of the commons occurs when

the good is rival in consumption, and nonexcludable.

If the average total costs is falling,

the marginal cost curve must be below the average total cost curve.

Based on the Coase theorem, private solutions to externalities will be impossible if

the number of parties involved is large.

Which of the following is an example of the tragedy of the commons?

the overgrazing of common pastures shared by herders in pastoral communities

Two roommates are opposites. One enjoys playing Modern Warfare with his friends all night. The other likes to get to bed early for a full 8 hours of sleep. The roommate who plays Modern Warfare values gaming more than his roommate values his sleep. According to the Coase theorem, if the roommates make a deal to resolve this conflict,

the person who plays Modern Warfare will compensate his roommate for loss of sleep.

Public goods are __________ in the market.

underproduced

In the long run, costs are

variable only