HW 7 Econ

Which of the following is an implicit cost of production?

rent that could have been earned on a building owned and used by the firm

If, when a firm doubles all its inputs, its average cost of production decreases, then production displays

Economies of scale.

Average fixed costs of production

Fall as long as output is increased

In economics, technology only refers to the development of new products.

False

Which of the following is a fixed cost?

Payment to hire a security worker to guard the gate to the factory around the clock

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?

$15

Refer to Figure above. When output level is 100, what is the total cost of production?

$2,000

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?

$220

Refer to Figure above. The marginal product of the 3rd worker is

15

If four workers can produce 18 chairs a day and five can produce 20 chairs a day, the marginal product of the fifth worker is

2 chairs

Refer to Figure above. Diminishing returns to labor set in

After L1

A characteristic of the long run is

All inputs can be varied

The processes a firm uses to turn inputs into outputs of goods and services is called

Technology

Marginal cost is equal to the

Change in total cost divided by the change in output.

When a firm's long-run average cost curve is horizontal for a range of output, then that range of production displays

Constant returns to scale.

The law of diminishing marginal returns states

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.

In the long run which of the following is true?

There are no fixed costs.

If a firm is experiencing diseconomies of scale, its long-run average cost curve is increasing.

True

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 increase

A firm has successfully adopted a positive technological change when

it can produce more output using the same inputs.