Micro Exam 5

Katherine gives piano lessons for $15 per hour. She also grows flowers, which she arranges and sells at the local farmer's market. One day she spends 5 hours planting $50 worth of seeds in her garden. Once the seeds have grown into flowers, she can sell them for $150 at the farmer's market. Katherine's accounting profits are (5 * 15) because those are 5 hours lost you could've spent planting flowers.

$100, and her economic profits are $25

Bob produces 3 apples. The cost of producing first apple is $6, the cost of producing second apple is $6, and the cost of producing third apple is $3. His total cost is?

$15

Jill sells 3 apples. The price of first apple is $7, the price of second apple is $8, and the price of third apple is $3. His total revenue is

$18

The Three Amigo's company produced and sold 500 dog beds. The average cost of production per dog bed was $50. Each dog be sold for a price of $65. The Three Amigo's total costs are

$25,000

Bob produces 3 apples. The cost of producing first apple is $6, the cost of producing second apple is $6, and the cost of producing third apple is $3. His marginal cost is

$3

Jill sells 3 apples. The price of first apple is $7, the price of second apple is $8, and the price of third apple is $3. His marginal revenue is

$3

Mike produces 3 apples. The cost of producing first apple is $6, the cost of producing second apple is $6, and the cost producing third apple is $3. He then sells the 3 apples. The price of first apple is $7, the price of second apple is $8, and the price of third apple is $3. His total profit is

$3

The Carolina Christmas Tree Corporation grows and sells 500 Christmas trees. The average cost of production per tree is $50. Each tree sells for a price of $65. The Carolina Christmas Tree Corporation's total revenues are

$32,500

Bob produces 3 apples. The cost of producing first apple is $6, the cost of producing second apple is $6, and the cost of producing third apple is $3. His average total cost is

$5

Jill sells 3 apples. The price of first apple is $7, the price of second apple is $8, and the price of third apple is $3. His average revenue is

$6

Trevor's Tire Company produced and sold 500 tires. The average cost of production per tire was $50. Each tire sold for a price of $65. Trevor's Tire Company's total profits are

$7,500

Law of diminishing marginal product of labor states that

If you keep on increasing labors, keeping other factors/inputs of production unchanged, after a certain point the marginal product/contribution of a labor will start falling

Total Cost (TC)

The amount that the firm pays to buy (all) inputs is called total cost. In other words, the market value of the inputs a firm uses in production

A firm produces 300 units of output at a total cost of $1,000. If fixed costs are $100

average variable cost is $3

Total revenue minus economic costs is called

economic profit

Some costs do not vary with the quantity of output produced. Those costs are called

fixed costs

Economies of Scale states that

long-run average total cost falls as the quantity of output increases

Some costs do vary with the quantity of output produced. Those costs are called

variable costs

You have decided to produce shirt. Which of the following is likely to be your fixed cost

you leased a building for 50 years and entered into a contract to pay a rent of $1000 per month