HOMEWORK 9

17. Refer to Scenario 13-7. Julia's economic profits are

$125,000

16. Scenario 13-7 Julia prepares tax returns and does bookkeeping. Last year her revenues from the tax and bookkeeping business were $150,000, and her expenses for the business were $15,000. When she started her tax and bookkeeping business, Julia gave up her supplemental job doing in-home pet sitting. She used to earn $10,000 per year from pet sitting. Assume that she incurred no costs for her pet sitting business. Refer to Scenario 13-7. Julia's accounting profits are

$135,000

30. David's firm experiences diminishing marginal product for all ranges of inputs. The total cost curve associated with David's firm

gets steeper as output increase

3. Economists normally assume that the goal of a firm is to(i) earn profits as large as possible, even if it means reducing output.(ii) earn revenues as large as possible, even if it means reducing profits.(iii) minimize costs, regardless of profits

ii and iii only

15. Economic profit

will never exceed accounting profit

6. If Kevin's children run a lemonade stand for a day and sell 200 glasses of lemonade at $0.50 each, their total revenues are

$100

13. Jacqui decides to open her own business and earns $50,000 in accounting profit the first year. When deciding to open her own business, she turned down three separate job offers with annual salaries of $30,000, $40,000, and $45,000. What is Jacqui's economic profit from running her own business?

$5000

27. Table 13-6 Refer to Table 13-6. Each worker at the Wooden Chair Factory costs $12 per hour. The cost of each machine is $20 per day regardless of the number of chairs produced. What is the total daily cost of producing at a rate of 55 chairs per hour if the factory operates 8 hours per day?

$520

9. Ryan sells 200 plastic ball point pens at $0.50 each. His total costs are $25. His profits are

$75

24. Table 13-2 Refer to Table 13-2. What is the marginal product of the third worker?

100 units

20. Kate is a florist. Kate can arrange 20 bouquets per day. She is considering hiring her husband William to work for her. Together Kate and William can arrange 35 bouquets per day. What is William's marginal product?

15 bouquets

23. Eldin is a house painter. He can paint three houses per week. He is considering hiring his friend Murphy. Together, Eldin and Murphy can paint five houses per week. What is Murphy's marginal product?

2 houses

25. Refer to Table 13-2. At which number of workers does diminishing marginal product begin?

2dimin

22. Let L represent the number of workers hired by a firm, and let Q represent that firm's quantity of output. Assume two points on the firm's production function are (L = 12, Q = 122) and (L = 13, Q = 130). Then the marginal product of the 13th worker is

8 units of output

7. The amount of money that a firm pays to buy inputs is called.

Total cost

1. Analyzing the behavior of the firm enhances our understanding of

What decisions lie behind the market supply curve

29. Figure 13-3 Refer to Figure 13-3. The changing slope of the total cost curve reflects

decreasing marginal product

26. When adding another unit of labor leads to an increase in output that is smaller than the increases in output that resulted from adding previous units of labor, the firm is experiencing

diminishing marginal product

14. Total revenue minus both explicit and implicit costs is called

economic profit

12. Pete owns a shoe-shine business. Which of the following costs would be implicit costs? (i) shoe polish (ii) rent on the shoe stand (iii) wages Pete could earn delivering newspapers (iv) interest that Pete's money was earning before he spent his savings to set up the shoeshine business

iii & iv only

18. Suppose that Christine owns her own CPA firm. She uses only two inputs in her business: her hours worked (labor) and a computer (capital). In the short run, Christine most likely considers

labor to be variable and capital to be fixed

2. Economists assume that the typical person who starts her own business does so with the intention of

maximizing profits

10. The things that must be forgone to acquire a good are called

opportunity costs

21. The marginal product of labor can be defined as the change in

output divided by the change in labor

4. Total revenue equalsa. price x quantity.b. price/quantity.c. (price x quantity) - total cost.d. output - input.

price x quantity

19. A production function is a relationship between inputs and

quantity of output

28. A total-cost curve shows the relationship between the

quantity of output produced and the total cost of productiondecreasin

11. Explicit costs

require an outlay of money by the firm

5. The amount of money that a firm receives from the sale of its output is called

total revenue

8. Profit is defined as

total revenue minus total cost