Chapter 7 Production Costs Assignment

The table below shows how total cost varies with output in a factory producing watches: Output Total Cost (Per Week) (Dollars) 0 $50 1 $60 2 $65 3 $69 4 $72 5 $95 6 $120 Refer to the table above. The marginal cost of producing a third watch equals:

$4

Based on the table below, what is the Marginal Cost of producing 2 units?

13

Approximately what percentage of the US labor force is employed by firms that have fewer than 100 employees?

35%

Refer to Exhibit A above. How much are Total Fixed Costs?

40

Five months ago Wilson opened up a health club. Which of the following is an implicit cost related to the health club?

Wilson previously worked as an accountant, earning $3,000 a month

Economic profits will take into account:

both implicit and explicit costs.

Fixed costs are best defined as:

costs that do not change regardless of the production level.

An example of an explicit cost of production is:

the cost of flour for a baker.

If a paper mill shuts down its operations for three months so that it produces nothing, its __________________ will be reduced to zero.

variable costs

Marcella operates a small, but very successful art gallery. All but one of the following can be classified as a variable cost arising from the physical inputs Marcella requires to operate her business. Which is it?

physical space for the gallery

An example of an implicit cost of production is:

the income an entrepreneur could have earned working for someone else.

Assume Brad worked as a contractor for a year and had revenues of $120,000 and explicit cost of $70,000. If he could have been paid $80,000 working for a computer company, his accounting profit as a contractor was ____ and his economic profit was ____.

$50,000; -$30,000

Based on the table below, what is the Total Cost of producing 1 unit?

42

Use the table shown. Marginal output (product) begins to diminish with the _____ worker

4th

Which statement is correct?

Accounting Profit is total revenue minus explicit costs while Economic Profit is total revenue minus both explicit and implicit costs.