HW CHAP 13

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 = 132). Then the marginal product of the 13th worker is ____ units of output.

10

Wanda owns a lemonade stand. She produces lemonade using five inputs: water, sugar, lemons, paper cups, and labor. Her costs per glass are as follows: $0.01 for water, $0.02 for sugar, $0.03 for lemons, $0.02 for cups, and $0.10 for the opportunity cost of her labor. She can sell 300 glasses for $0.50 each.

$0.08

Suppose that Abdul opens a coffee shop. He receives a loan from a bank for $100,000. He withdraws $50,000 from his personal savings account. The interest rate on the loan is 8%, and the interest rate on his savings account is 2%. Abdul's implicit cost of capital is...

$1,000

Suppose that Emily opens a restaurant. She receives a loan from a bank for $200,000. She withdraws $100,000 from her personal savings account. The interest rate on the loan is 6%, and the interest rate on her savings account is 2%. Emily's explicit cost of capital is ...

$12,000

Wanda owns a lemonade stand. She produces lemonade using five inputs: water, sugar, lemons, paper cups, and labor. Her costs per glass are as follows: $0.01 for water, $0.02 for sugar, $0.03 for lemons, $0.02 for cups, and $0.10 for the opportunity cost of her labor. She can sell 300 glasses for $0.50 each. What are Wanda's total accounting profits?

$126

The Wacky Widget company has total fixed costs of $100,000 per year. The firm's average variable cost is $5 for 10,000 widgets. At that level of output, the firm's average total costs equal..

$15

Walter builds birdhouses. He spends $5 on the materials for each birdhouse. He can build one in 30 minutes. He is semi-retired but earns $8 per hour at the local hardware store. He can sell a birdhouse for $20 each. An accountant would calculate the total profit for one birdhouse to be ...

$15

Gary is a senior majoring in computer network development at Smart State University. While he has been attending college, Gary started a computer consulting business to help senior citizens set up their network connections and teach them how to use e-mail. Gary charges $25 per hour for his consulting services. Gary also works 5 hours a week for the Economics Department to maintain that department's Web page. The Economics Department pays Gary $20 per hour. If Gary can work additional hours at either job, what is the opportunity cost if Gary spends one hour reading a novel?

$25

Ellie has been working for an engineering firm and earning an annual salary of $80,000. She decides to open her own engineering business. Her annual expenses will include $15,000 for office rent, $3,000 for equipment rental, $1,000 for supplies, $1,200 for utilities, and a $35,000 salary for a secretary/bookkeeper. Ellie will cover her start-up expenses by cashing in a $20,000 certificate of deposit on which she was earning annual interest of $500. Ellie's annual accounting costs will equal...

$55,200

A certain firm produces and sells staplers. Last year, it produced 7,000 staplers and sold each stapler for $6. In producing the 7,000 staplers, it incurred variable costs of $28,000 and a total cost of $45,000. In producing the 7,000 staplers, the firm's average total cost was..

$6.43

Johnny is a sophomore in college and has a 1.5 cumulative grade point average (GPA). Johnny's cumulative GPA will fall even further next semester if he performs worse than (i) his cumulative GPA. (ii) he ever performed before. (iii) he did last semester.

(i) and (ii) only

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? ___ houses

2 houses

Ellie has been working for an engineering firm and earning an annual salary of $80,000. She decides to open her own engineering business. Her annual expenses will include $15,000 for office rent, $3,000 for equipment rental, $1,000 for supplies, $1,200 for utilities, and a $35,000 salary for a secretary/bookkeeper. Ellie will cover her start-up expenses by cashing in a $20,000 certificate of deposit on which she was earning annual interest of $500. According to an economist, which of the following revenue totals will yield Ellie's business $50,000 in economic profits? a. $185,700 b. $55,200 c. $100,200 d. $132,500

a. $185,700

Which of these assumptions is often realistic for a firm in the short run? a. The firm can vary the number of workers it employs but not the size of its factory. b. The firm can vary both the size of its factory and the number of workers it employs. c. The firm can vary the size of its factory but not the number of workers it employs. d. The firm can vary neither the size of its factory nor the number of workers it employs.

a. The firm can vary the number of workers it employs but not the size of its factory.

Which of the following costs do not vary with the amount of output a firm produces? a. fixed costs b. average fixed costs c. fixed costs and average fixed costs d. marginal costs and average fixed costs

a. fixed costs

In the short run, a firm that produces and sells cell phones can adjust a. how many workers to hire. b. the size of its factories. c. where to produce along its long-run average-total-cost curve. d. All of the above are correct.

a. how many workers to hire.

Average total cost is very high when a small amount of output is produced because ___________________ is high

average fixed cost

If marginal cost is greater than average total cost, then _____________________ is increasing.

average total cost

Which of the following costs do not vary with the amount of output a firm produces? a. marginal costs and average fixed costs b. fixed costs and average fixed costs c. average fixed costs d. fixed costs

d. fixed costs

When the marginal product of an input declines as the quantity of that input increases, the production function exhibits...

diminishing marginal product

Joan grows pumpkins. If Joan plants no seeds on her farm, she gets no harvest. If she plants 1 bag of seeds, she gets 500 pumpkins. If she plants 2 bags, she gets 800 pumpkins. If she plants 3 bags, she gets 900 pumpkins. A bag of seeds costs $100, and seeds are her only cost. Joan's total-cost curve is increasing at a _____________ rate

increasing

A firm that wants to achieve economies of scale could do so by assigning __________ tasks to its employees, so they can ________ those tasks.

limited master

In his book, An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith described a visit he made to a ______ factory.

pin

Assume a certain firm regards the number of workers it employs as variable but regards the size of its factory as fixed. This assumption is often realistic in the ______ run but not in the ______ run.

short long

One assumption that distinguishes short-run cost analysis from long-run cost analysis for a profit-maximizing firm is that in the short run, the ________ of the factory is fixed.

size

If a firm produces nothing, the _____________ costs will be zero.

variable