Chapter 4.1

The units of variable input in a production. process are 1, 2, 3, 4, and 5. The corresponding total outputs are 8, 16, 24, 31, and 37, respectively. The marginal product for the fourth unit is:

7

Tony's parents own a dry cleaning business and Tony helps his family by working on Saturdays. Since Tony is a member of the family he isn't paid, but he does collect tips. In terms of costs, how would the business be categorize Tony's labor?

An implicit cost

Say Sally's Super Shoes has total revenues of $20,000, explicit costs of $15,000, and implicit cost of $5,000. Sally should:

Be happy to know se's earning a normal profit and stay in business

Which type of business organization has the greatest volume f sales in the United States?

Corporation

Which type of business organization is subject to double taxation?

Corporations

Consider the following units of variable input-1, 2, 3, 4, and 5-and the corresponding total inputs are 8, 16, 24, 31, and 36, respectively. At what point do diminishing marginal returns set in?

Fourth unit of input

Most profit0oriented business are organized as:

Sole proprietorships

To pay for resources, a business owner must pay the resource owner at least:

The opportunity cot of the resource

The short-run is:

The period of time in which a firm can't change its use of fixed inputs

The economic profit of a firm includes the opportunity costs of all resources used in production. What do these opportunity costs measure?

The value of resources at their best alternative use