Econ Chapter 11 Study Plan Questions

When output is 15,000, what is the average variable cost?

3.67

What does the observation that the smaller jets were easier to fill with passengers imply about the average cost of flying a passenger in a smaller jet and in an​ A380? The implication is that the average cost of flying a passenger on a smaller jet is _______ the cost of flying a passenger on a larger jet.

Lower than

In the short run, if the marginal cost is at its maximum, then

The marginal cost is at its minimum

Does your answer to part​ (a) mean that there are no economies of scale with respect to​ jets? The implication is that because technological change has made it possible for firms manufacturing jets to use carbon fiber parts and more efficient​ engines, the minimum efficient size of jets is _____ than it had been. In these​ circumstances, building larger jets may lead to _______

smaller, diseconomies of scale

Southwest signs a new contract with the Transport Workers Union that requires the airline to increase wages for its flight attendants Marginal cost would ____, average variable cost would ____, average fixed cost would ____, and average total cost would ____

increase, increase, remain unchanged, increase

Southwest signs a new contract with the transport workers union that requires the airline to increase wages for its flight attendants. Marginal cost would ___, average variable cost would ____, average dixed cost would ___, and average total cost would ____

increase, increase, remain unchanged, increase

The federal government starts to levy a 20 dollar per passenger carbon emissions tax on all commercial air travel Marginal cost would ___, average variable cost would ___, average fixed cost would ___, anda verage total cost would ____

increase, increase, remain unchanged, increase

Southwest decides to cut its television advertising budget Marginal cost would ____, average variable cost would ___< average fixed cost would ____, and average total cost would _____

remain unchanged, remain unchanged, decrease, decrease

Southwest decides on an across-the-board 10 percent incerase in executive salaries Marginal cost would ____, average variable cost would ___, average fixed cost would ___, and average total cost would ____

remain unchanged, remain unchanged, increase, increase

as output increases, the vertical distance between average total cost and average variable cost curves gets ___ and equals ____

smaller, average fixed cost

Use your answer above and the expressions given for the marginal product of labor and the marginal cost of output to find an expression for marginal​ cost, ΔTC/ΔQ​, in terms of the​ wage, w, and the marginal product of​ labor, ΔQ/ΔL. Part 4 Marginal cost equals

w divided by left parenthesis Upper Delta Upper Q divided by Upper Delta Upper L right parenthesisw/(ΔQ/ΔL).

When output is 15,000, what is the average fixed cost?

0.33

What is the differnce between the average cost of production and the marginal cost of production?

ATC = TC/Q MC = Change in total cost/change in quantity

Which cost measure is equal to AFC+ AVC?

average total cost

Assuming that the cost curves have the usual shape, the dollar difference between average total costs and average variable costs ___ as output increases

decreases

Economies of scale happen when the firm's long run average total cost____ as output increases

decreases

If instead the wage is unchanged at ​$800 per week and the marginal product rises to 250​, then​ Jill's marginal cost _____

decreases

If the wage falls to $700 per week and the marginal product of labor is​ unchanged, then​ Jill's marginal cost ____

decreases

The wages she pays her workers is a ___ cost

variable

Use your answer above to determine​ Jill's marginal cost of producing pizzas if the wage is $800 per week and the marginal product of labor is 200. The marginal cost of production is $___. ​(Enter your response rounded to two decimal​ places.)

4

Suppose the total cost of producing 15,000 tennis balls is 60,000 dollars and the fixed cost is 5,000 dollars What is the variable cost?

55,000 dollars

A column on barrons.com discussing General Motors​ (GM) made the following​ observation: "Even the seemingly​ 'variable' costs of hourly workers were made burdensome by union agreements whereby​ 95% of hourly​ workers' salaries were paid when they were laid​ off, turning variable labor compensation into a fixed​ cost." ​Source: Christine​ Jurzensk, "Why GM Shares Have a​ 58% Upside: Hedge​ Funder," barrons.com, April​ 3, 2019. a.​ Aren't workers' salaries always a variable cost and not a fixed​ cost? A. While​ workers' salaries are typically a variable​ cost, because of this union​ agreement, 95 percent of​ GM's production​ workers' salaries were a fixed cost to the​ firm, with only 5 percent being a variable cost. B. Yes, workers' salaries are always a variable cost and never a fixed​ cost, regardless of any union agreements. C. While all​ workers' salaries are typically a variable​ cost, because of this union​ agreement, 5 percent of​ GM's production​ workers' salaries were a fixed cost to the​ firm, with the​ majority, 95​ percent, still being a variable cost. D. No, workers' salaries are typically a fixed cost and not a variable cost.

A

According to an article in the Wall Street Journal​, Parsley Energy has been very active in drilling oil wells in the Permian Basin of Texas and New Mexico. In​ 2019, the company decided to cut back spending on exploring for new oil deposits. ​Source: Clifford​ Krauss, "How a​ 'Monster' Texas Oil Field Made the U.S. a Star in the World​ Market," Wall Street Journal​, February​ 3, 2019. Briefly explain how​ Parsley's decision will affect the​ firm's marginal cost of producing oil. Since costs incurred from exploring for new oil fields are part of Parsley​ Energy's A. fixed​ costs, if they cut back on oil​ exploration, their marginal cost of producing oil​ won't change. B. variable​ costs, if they cut back on oil​ exploration, their marginal cost of producing oil​ won't change. C. fixed​ costs, if they cut back on oil​ exploration, their marginal cost of producing oil will decrease. D. variable​ costs, if they cut back on oil​ exploration, their marginal cost of producing oil will decrease.

A

An implicit cost is Part 3 A. a nonmonetary opportunity cost. B. a cost that changes as output changes. C. a cost that remains constant as output changes. D. a cost incurred in the long run. E. the​ highest-valued alternative that must be given up to engage in an activity.

A

As the level of output​ increases, what happens to the difference between the value of average total cost and average variable​ cost? Part 2 As the level of output​ increases, the difference between the value of average total cost and average variable cost Part 3 A. decreases because average fixed cost decreases as output increases. B. remains constant because average fixed cost remains the same as output increases. C. decreases because average total cost and average variable cost decrease with output. D. remains constant because average total cost and average variable cost both increase with output. E. increases because average total cost increases with output but average fixed cost decreases with output.

A

Devra​ Gartenstein, a restaurant​ owner, made the following observation about preparing​ food: "Cooks become increasingly less productive as a kitchen becomes increasingly​ crowded." ​Source: Devra​ Gartenstein, "Law of Diminishing Marginal Returns in Restaurant​ Operations," smallbusiness.chron.com. What do economists call the problem she is​ describing? What are its implications for the marginal product of labor for​ cooks? A. Diminishing marginal​ returns, where additional cooks produce less additional output. B. Fixed​ inputs, where additional cooks do not produce additional output. C. Negative marginal​ returns, where additional cooks reduce the output produced. D. Increasing marginal​ returns, where additional cooks produce additional output.

A

How are implicit costs different from explicit​ costs? Part 5 A. An explicit cost is a cost that involves spending​ money, while an implicit cost is a nonmonetary cost. B. An explicit cost is not an opportunity​ cost, while an implicit cost is an opportunity cost. C. An explicit cost is a cost incurred in the long ​run, while an implicit cost is a cost incurred in the short run. D. An explicit cost is a cost incurred holding output constant​, while an implicit cost is a cost incurred as output changes. E. Both a and b.

A

Is Jill Johnson correct when she says the​ following: ​"I am currently producing​ 10,000 pizzas per month at a total cost of ​$30,000. If I produce​ 10,001 pizzas, my total cost will rise to ​$30,050. ​Therefore, my marginal cost of producing pizzas must be​ increasing." A. Jill's average total cost of production is​ increasing, so her marginal cost of producing pizzas must be increasing. B. Jill's average total cost of production is​ decreasing, so her marginal cost of producing pizzas must be decreasing. C. Jill's average total cost of production is​ decreasing, so her marginal cost of producing pizzas must be increasing. D. Jill's average total cost of production is​ increasing, so her marginal cost of producing pizzas must be decreasing. E. Though​ Jill's average total cost of production is​ decreasing, her marginal cost of producing pizzas could be increasing or decreasing.

A

Question content area Part 1 The​ short-run average cost can never be less the​ long-run average costs because Part 2 A. in the long​ run, all inputs are adjusted including the ones that are fixed in the short run. B. the​ long-run marginal cost is less than the​ short-run marginal cost. C. in the long​ run, a firm always experiences the economies of scope. D. in the long​ run, a firm produces more output so that the​ per-unit cost in the long run becomes less than the​ per-unit cost in the short run.

A

Suppose Jill Johnson operates her pizza restaurant in a building she owns in the center of the city. Similar buildings in the neighborhood rent for​ $4,000 per month. Jill is considering selling her building and renting space in the suburbs for​ $3,000 per month. Jill decides not to make the move. She​ reasons, "I would like to have a restaurant in the​ suburbs, but I pay no rent for my restaurant​ now, and I​ don't want to see my costs rise by​ $3,000 per​ month." What do you think of​ Jill's reasoning? A. Jill is incorrectly ignoring the opportunity cost of using the building she owns. B. Jill is incorrectly overestimating her variable costs of production. C. Jill is incorrectly failing to consider her fixed costs of production. D. Jill is incorrectly failing to account for the cost of renting in the suburbs. E. Jill is correctly attempting to limit her explicit costs of production.

A

The law of diminishing returns applies A. in the short run. B. in the long run. C. either in the short run or the long run. D. None of the above.

A

What are diseconomies of​ scale? Part 2 Diseconomies of scale is Part 3 A. when a​ firm's long-run average costs increase with output.. B. when the marginal product of labor is increasing with output. C. when the marginal cost of production is decreasing with output. D. when a​ firm's long-run average costs decrease with output.

A

What is likely to happen in the long run to firms that do not reach minimum efficient scale? A firm that does not reach its minimum efficient scale A. will lose money if it remains in business. B. will be experiencing constant returns to scale. C. will become a natural monopoly. D. will earn positive profits if it remains in business. E. both a and b.

A

What is the law of diminishing​ returns? Part 2 The law of diminishing returns states that Part 3 A. adding more of a variable input to the same amount of a fixed input will eventually cause the marginal product of the variable input to decline. B. adding more of a variable input to the same amount of a fixed input will eventually cause the marginal product of the fixed input to decline. C. dividing the tasks to be performed through division of labor will increase the marginal product of labor. D. the​ long-run average cost of production falls as output increases. E. producing more output by adding more of a variable input will eventually cause the marginal cost of production to decline.

A

Which costs are affected by the level of output produced? A. variable costs B. all costs C. sunk costs D. fixed costs

A

Which of the following are sometimes called accounting costs? A. explicit costs B. economic costs C. implicit costs D. total variable costs

A

Which of the following terms refers to the lowest cost at which a firm is able to produce a given level of output in the long​ run, when no inputs are​ fixed? A. the​ long-run average cost curve B. the variable inputs curve C. economies of scale D. the​ long-run marginal cost curve

A

A student looks at the data in the table to the right and draws this​ conclusion: ​"The marginal product of labor is increasing for the first 3 workers​ hired, and then it declines for the next 3 workers. I guess each of the first 3 workers must have been hard workers. Then Jill must have had to settle for increasingly poor​ workers." Part 2 Do you agree with the​ student's analysis? Briefly explain. Part 3 A. No. Marginal product initially increases due to specialization and then decreases due to division of labor. B. No. Marginal product initially increases due to specialization and then decreases due to the law of diminishing returns. C. No. Marginal product initially increases due to division of labor and then decreases due to specialization. D. Yes. Productivity differences among these workers are due to effort. E. No. Marginal product initially decreases due to the law of diminishing returns and then increases due to division of labor.

B

A technology website estimated that the cost of materials and components in​ Apple's iPhone XS Max was​ $453. Apple was selling this phone for​ $1,249. ​Source: Daniel Yang and Stacy​ Wegner, "Apple iPhone XS Max​ Teardown," techinsights.com, October​ 3, 2018. Can we conclude from this information that Apple was making a profit of about​ $796 on each of these​ iPhones? A. No; to calculate economic​ profit, all implicit and explicit costs relating to the production of the iPhone must be added to the total revenue earned from selling the​ phones, so Apple made more than​ $796 on each iPhone. B. No; to calculate economic​ profit, all implicit and explicit costs relating to the production of the iPhone must be subtracted from the total revenue earned from selling the​ phones, so Apple made less than​ $796 on each iPhone. C. No; to calculate economic​ profit, only implicit costs relating to the production of the iPhone must be subtracted from the total revenue earned from selling the​ phones, so Apple made more than​ $796 on each iPhone. D. Yes; Apple was making a profit of ​$1,249−​$453=​$796 on each iPhone.

B

If the marginal product of labor is rising​, is the marginal cost of production rising or​ falling? Briefly explain. If the additional output from each new worker is rising​, A. the marginal cost of that output is rising because the only additional cost to producing more output is the additional wages paid to hire more workers. B. the marginal cost of that output is falling because the only additional cost to producing more output is the additional wages paid to hire more workers. C. the marginal cost of that output is falling due to economies of scale. D. the marginal cost of that output is falling due to the law of diminishing returns. E. the marginal cost of that output is rising because the total cost of labor is increasing with each additional worker.

B

Older oil wells that produce fewer than 10 barrels of oil a day are called​ "stripper" wells. Suppose that you and a partner own a stripper well that can produce eight barrels of oil per day and you estimate that the marginal cost of producing another barrel of oil is​ $80. In making your​ calculation, you take into account the cost of​ labor, materials and other inputs that increase when you produce more oil. Your partner looks over your calculation of marginal cost and​ says: "You forgot about that bank loan we received two years ago. If we take into account the amount we pay on that​ loan, its adds​ $10 per barrel to our marginal cost of​ production." Which of the following statements is most​ true? A. The bank loan should be included in marginal cost because the interest to service the loan is an ongoing cost. B. The bank loan should not be included in marginal cost because it cannot be avoided by not producing another barrel. C. The bank loan should be included in marginal cost because this cost can be avoided by not producing another barrel. D. The bank loan should not be included in marginal cost because a loan has to be paid back.

B

Suppose a firm has no fixed​ costs, so all of its costs are​ variable, even in the short run. Part 2 If the​ firm's marginal costs are continually increasing​ (that is, marginal cost is increasing from the first unit of output​ produced), will the​ firm's average total cost curve have a U​ shape? A. Yes. The average total cost curve will have a U shape. B. No. The average total cost curve will be continually increasing. C. No. The average total cost curve will be vertical. D. No. The average total cost curve will be horizontal. E. No. The average total cost curve will be continually decreasing.

B

What is minimum efficient​ scale? Part 2 Minimum efficient scale is Part 3 A. the level of output at which the marginal cost of production reaches a minimum. B. the level of output at which all economies of scale are exhausted. C. the level of output at which the​ long-run average cost of production begins to decline. D. the level of output at which a firm begins to experience economies of scale. E. the level of output at which all diseconomies of scale are exhausted.

B

What is the difference between technology and technological change? A. technology is the development of new products, while technological change is when a firm is able to produce more output with the same inputs B. technology is the process of using inputs to make output, while technological change is when a firm is able to produce the same output using fewer inputs C. technology is the process of using inputs to make output, while technological change is when a firm is able to produce more output using more inputs D. technology is when a firm is able to produce more output using the same inputs, while technological change is the process of using inputs to make output E. technology is the development of new products, while technological change is when a firm is able to produce the same output with fewer inputs

B

Which of the following is an example of this type of​ cost? A. materials used in production B. rent for a store or warehouse C. utilities D. wages

B

Which of the following is most likely to a variable cost for a business​ firm? A. property taxes B. cost of shipping products C. rent on the office building D. interest on​ long-term outstanding bonds

B

​EOG, a​ Texas-based producer of oil and​ gas, is called the​ "Apple of​ oil" because of the​ company's history of developing innovative methods to extract energy from shale rock. Using one of​ EOG's innovations, called​ iSteer, the company can navigate through thousands of feet of rock with a drill bit that allows for greater recovery of oil and gas than methods the company previously used. ​Source: Erin​ Ailworth, "Fracking​ 2.0: Shale Drillers Pioneer New Ways to Profit in Era of Cheap​ Oil," Wall Street Journal​, March​ 30, 2017. Briefly explain why economists would consider​ EOG's use of iSteer an example of technological change. A. The​ company's use of iSteer allows it to recover both oil and gas. B. EOG's use of iSteer enables it to recover more oil and gas with a certain quantity of inputs. C. The​ company's use of iSteer enables it to recover oil and gas using different combinations of inputs. D. EOG is able to recover oil and gas with less labor by using more capital

B

​Segment.com, based in San​ Francisco, develops and sells software that allows companies to gather data on customers and manage the​ companies' social media presence. Segment reorganized its office as part of its​ "anti-distraction campaign." According to an article in the Wall Street​ Journal, the company cut back on its internal text messaging service and moved​ "some of its communication back to email to reduce the number of notifications employees were​ receiving." ​Source: Rachel​ Feintzeig, "How One Firm Lowered Its​ Open-Office Noise," Wall Street Journal​, November​ 15, 2016. Does this movement from a new technology—text messaging—to an older technology—email—represent positive or negative technological change at​ Segment? Briefly explain. A. Positive technological​ change, because output can be produced at a lower cost . B. Positive technological​ change, because more output can be produced using the same inputs. C. Negative technological​ change, because output from a given quantity of inputs may decline. D. Negative technological​ change, because the old technology had already been available.

B

After the Sears department store chain emerged from​ bankruptcy, its CEO Edward Lampert was quoted as​ saying: "Our goal is to continue to shrink the size of our​ stores." ​Source: Suzanne​ Kapner, "Edward​ Lampert's Plan for​ Sears: Smaller​ Stores, Less​ Apparel," Wall Street Journal​, February​ 13, 2019. Is​ Lampert's remark referring to​ Sears's economic short run or its economic long​ run? Briefly explain. A. Short​ run, because the store size is fixed. B. Long​ run, because other inputs can be changed. C. Long​ run, because changing the size of stores takes a significant amount of time. D. Short​ run, because the store size impacts production now.

C

Economies of scale occur A. when a​ firm's long-run average costs increase with output. B. when the marginal product of labor increases with output. C. when a​ firm's long-run average costs decrease with output. D. when the marginal cost of production decreases with output.

C

In his​ autobiography, T. Boone​ Pickens, a​ geologist, entrepreneur, and oil company​ executive, wrote: ​It's unusual to find a large corporation​ that's efficient ... When you get an inside​ look, it's easy to see how inefficient big business really is. Most corporate bureaucracies have more people than they have work. ​Source: T. Boone​ Pickens, The Luckiest Man in the World​, ​Washington, DC: Beard​ Books, 2000, p. 275. Pickens was describing A. diminishing​ returns, because he is referring to the inefficieny of a large scale business operation. B. diminishing​ returns, because he is referring to the decrease in marginal output when another worker is added. C. diseconomies of​ scale, because he is referring to the inefficieny of a large scale business operation. D. diseconomies of​ scale, because he is referring to the decrease in marginal output when another worker is added.

C

In​ 2019, an article in the Wall Street Journal noted that the federal​ government's Office of the Comptroller of the Currency had said about Wells Fargo​ bank, "We continue to be disappointed with...its inability to execute effective corporate governance and a successful risk management​ program." According to the​ article, a senior member of Congress​ "suggested the bank should be downsized because it was too large to​ manage." ​Source: Rachel Louise Ensign and Andrew​ Ackerman, "Regulator Slams Wells Fargo after CEO Testifies to​ Congress," Wall Street Journal​, March​ 12, 2019. After reading this​ article, a student​ remarks: "It seems that Wells Fargo is suffering from diminishing​ returns." Briefly explain whether you agree with this remark. A. Agree: if the bank is too large to​ manage, then it is suffering from diminishing returns. B. Disagree: the student confused diminishing​ returns, which refers to the behavior of costs in the long​ run, with diseconomies of scale. C. Disagree: the student confused diminishing​ returns, which refers to the behavior of costs in the short​ run, with diseconomies of scale. D. Disagree: the student confused diminishing​ returns, which refers to the behavior of costs in the short​ run, with economies of scale.

C

Question content area Part 1 What is a production​ function? A​ firm's production function is best described as A. a relationship between the amounts of outputs of different products the firm can produce with fixed amounts of inputs. B. a relationship between the total cost of production and the level of output. C. illustrating the relationship between inputs and the maximum amounts of output that the firm can produce with these inputs. D. a relationship between different inputs that the firm uses to produce a fixed amount of output.

C

Sally looks at her college transcript and says to​ you, ​"How is this​ possible? My grade point average​ (GPA) for this​ semester's courses is higher than my GPA for last​ semester's courses, but my cumulative GPA still went down from last semester to this​ semester." Part 2 Explain to Sally how this is possible. Part 3 A. Sally's GPA for last semester was equal to her cumulative GPA. B. Sally's GPA for this semester is higher than her cumulative GPA. C. Sally's GPA for this semester is lower than her cumulative GPA. D. Sally took more courses last semester than this semester. E. This is not​ possible, and​ Sally's cumulative GPA has been calculated incorrectly.

C

Suppose that competition for software engineers results in Segment.com having to pay them higher salaries. Would the fact that the firm will now face an increased cost of providing its services be an example of negative technological​ change? Briefly explain. A. Yes, this represents negative technological change because the cost of producing the same output has increased. B. Yes, this is an example of negative technological change because fewer workers will be​ hired, reducing output. C. No, this would not represent technological change because the same output can be produced using the same inputs. D. No, this would not represent technological change because the​ output's price will rise with​ workers' wages.

C

The GPA you earn in a particular semester is your​ ________ GPA, and your cumulative GPA for all completed semesters is your​ ________ GPA. A. average; total B. average; marginal C. marginal; average D. total; marginal

C

The relationship between the inputs employed by a firm and the maximum output it can produce with those inputs is called the A. utility curve B. consumption function C. production function D. budget constraint

C

When a positive technological change occurs, A. the same output can be produced with fewer inputs B. more output can be produced from the same inputs C. either a or b D. none of the above

C

When marginal cost is less than average total cost, average total cost must be A. increasing B. constant C. decreasing D. negative

C

When the DuPont chemical company first attempted to enter the paint​ business, it was not successful. According to a company​ report, in one year it ​"lost nearly​ $500,000 in actual cash in addition to an expected return on investment of nearly​ $500,000, which made a total loss of income to the company of nearly a​ million." Why did this report include as part of the​ company's loss the amount it had expected to earn​ -- but​ didn't -- on its investment in manufacturing​ paint? ​Source: Alfred D.​ Chandler, Jr., Thomas K.​ McCraw, and Richard​ Tedlow, Management Past and​ Present,​ Cincinnati: South-Western,​ 2000, pp.​ 3-92. Part 2 A. The report sought to include explicit costs because DuPont could have invested its money elsewhere and earned​ $500,000. B. The report sought to include variable costs because DuPont could have invested its money elsewhere and earned​ $500,000. C. The report sought to include implicit costs because DuPont could have invested its money elsewhere and earned​ $500,000. D. The report sought to include explicit costs because this is standard accounting practice. E. The report sought to include implicit costs because this is standard accounting practice.

C

When the marginal product of labor is greater than the average product of​ labor, then the average product of labor must be A. decreasing. B. constant. C. increasing. D. Any of the above answers is possible.

C

Which of the following is most likely to be a fixed cost for a​ farmer? A. wages paid to farm workers B. cost of seeds C. insurance premiums on property D. cost of fertilize

C

A student​ asks, "If the average cost of producing pizzas is lower in the larger restaurant when Jill produces​ 1,100 pizzas per​ week, why​ isn't it also lower when Jill produces 500 per​ week?" Give a brief answer to the​ student's question. Part 7 A. The smaller restaurant benefits more from division of labor. B. The larger restaurant experiences diminishing returns sooner than the smaller restaurant. C. The smaller restaurant has no fixed costs. D. The larger restaurant has higher fixed costs than the smaller restaurant. E. Both a and b.

D

A study analyzed the costs to a pharmaceutical firm of developing a prescription drug and receiving government approval. An article in the Wall Street Journal noted that included in the​ firm's costs was​ "the return that could be gained if the money​ [used to develop the​ drug] were invested​ elsewhere." Briefly explain whether you agree that this return should be included in the​ firm's costs. ​Source: Ed​ Silverman, "Can It Really Cost​ $2.6 Billion to Develop a​ Drug?," Wall Street Journal​, November​ 21, 2014. This return A. should be included in the​ firm's costs because the explicit cost of the​ firm's investment is one of the​ firm's direct production costs. B. should not be included in the​ firm's costs because it is not a direct cost. C. should not be included in the​ firm's costs because it is only a theoretical cost. D. should be included in the​ firm's costs because the opportunity cost of the​ firm's investment is one of the​ firm's implicit production costs.

D

According to an article in the Wall Street Journal​, ​"United [Airlines] rolled out a new app to its flight attendants earlier this year with so much information about​ people, the airline has been reluctant to turn on all the functionality. The tool can show flight attendants information on each frequent​ flier's five previous flights....But United is worried some customers might consider that​ stalking." ​Source: Scott​ McCartney, "What the Airline Knows about the Guy in Seat​ 14C," Wall Street Journal​, June​ 20, 2018. Is the app an example of positive technological​ change? Negative technological​ change? Does the answer depend on how costumers react to​ United's use of the​ app? A. If customers dislike the app enough that they switch to another airline or get into lengthy arguments with flight​ attendants, the app is a negative technological change. B. If the app allows flight attendants to access information about customers more efficiently and makes them more productive in helping passengers the app is a positive technological change. C. If the app allows flight attendants to know whether a passenger needs a special diet or help getting on and off the​ plane, the app is a positive technological change. D. All of the above are true

D

Any cost that changes as output changes represents a​ firm's A.fixed cost. B.overhead cost. C.sunk cost. D.variable cost.

D

Any cost that remains unchanged as output changes represents a​ firm's A. variable cost. B. marginal cost. C. opportunity cost. D. fixed cost.

D

Briefly explain whether you agree or disagree with the following​ argument: Adam​ Smith's idea of the gains to firms from the division of labor makes a lot of sense when the good being manufactured is something complex like automobiles or​ computers, but it​ doesn't apply in the manufacturing of less complex goods or in other sectors of the​ economy, such as retail sales. Part 2 A. The argument is correct. Gains from division of labor were only important in the eighteenth century. B. The argument is incorrrect. Gains from division of labor will always occur when more workers are added to the production process. C. The argument is correct. Gains from division of labor apply to complex manufacturing but not services. D. The argument is incorrect. Gains from division of labor will occur whenever production of a good or provision of a service has multiple tasks. E. The argument is incorrect. Gains from division of labor will only occur when all inputs are variable.

D

For which of the following​ reason(s) may firms experience economies of​ scale? A. Firm's production may increase with a smaller proportional increase in at least one input. B. Large firms may be able to purchase inputs at lower costs than smaller​ competitors; they can also borrow money at a lower interest rate. C. Both managers and workers may become more specialized and hence more productive as output expands. D. All of the above

D

Question content area Part 1 Is Jill Johnson correct when she says the​ following: ​"I am currently producing​ 20,000 pizzas per month at a total cost of ​$40,000. If I produce​ 20,001 pizzas, my total cost will rise to ​$40,001. ​Therefore, my marginal cost of producing pizzas must be​ increasing." Part 2 A. Jill's average total cost of production is​ decreasing, so her marginal cost of producing pizzas must be increasing. B. Jill's average total cost of production is​ increasing, so her marginal cost of producing pizzas must be increasing. C. Jill's average total cost of production is​ increasing, so her marginal cost of producing pizzas must be decreasing. D. Though​ Jill's average total cost of production is​ decreasing, her marginal cost of producing pizzas could be increasing or decreasing. E. Jill's average total cost of production is​ decreasing, so her marginal cost of producing pizzas must be decreasing.

D

Question content area Part 1 Is it possible for average total cost to be decreasing over a range of output where marginal cost is​ increasing? Briefly explain. Part 2 A. Yes. If marginal cost is less than average total​ cost, then average total cost will be increasing. B. No. If marginal cost is​ increasing, then average total cost will be increasing. C. Yes. If marginal cost is​ increasing, then average total cost will be decreasing. D. Yes. If marginal cost is less than average total​ cost, then average total cost will be decreasing. E. Yes. If marginal cost is less than average total​ cost, then average total cost may be increasing or decreasing.

D

Suppose that last semester your semester GPA was 3.70 and your resulting cumulative GPA was 2.95. Part 2 ​Next, suppose that this semester your semester GPA will be 3.50. Part 3 If​ so, then your cumulative GPA Part 4 A. will increase because your​ "marginal" GPA will be below your semester GPA last semester. B. will increase because your​ "marginal" GPA will be above your semester GPA last semester. C. could increase or decrease because your​ "marginal" GPA will be below your semester GPA last semester but above your cumulative GPA. D. will increase because your​ "marginal" GPA will be above your cumulative GPA. E. will decrease because your​ "marginal" GPA will be below your semester GPA last semester.

D

What does the​ short-run production function hold​ constant? A​ short-run production function holds constant A. the amount of output. B. the amounts of all inputs. C. the amount of labor. D. the amount of capital.

D

What is the difference between the short run and the long​ run? Part 2 A. In the short​ run, all of a​ firm's inputs are​ fixed, while in the long​ run, a firm is able to vary at least one input and adopt new technology. B. In the short​ run, a firm can vary all inputs but technology is​ fixed, while in the long​ run, a firm can adopt new technology but all inputs are fixed. C. In the short​ run, all of a​ firm's inputs are​ fixed, while in the long​ run, a firm is able to vary all its inputs and adopt new technology. D. In the short​ run, at least one of a​ firm's inputs is​ fixed, while in the long​ run, a firm is able to vary all its inputs and adopt new technology. E. In the short​ run, a firm can vary all inputs but technology is​ fixed, while in the long​ run, a firm can vary all inputs and adopt new technology.

D

What is the main reason that firms eventually encounter diseconomies of scale as they keep increasing the size of their store or​ factory? A. The marginal product of labor begins to decrease according to the law of diminishing returns. B. Higher output levels result in lower market prices. C. Firms exhaust the benefits of specialization. D. Firms have difficulty coordinating production. E. Fixed costs become too large.

D

Which of the following is likely to be one of the most important fixed costs for an​ airline? A. the cost of​ supplies, such as toilet paper B. the wages and salaries it pays to its employees C. the cost of food and beverages D. the cost of its planes

D

Will a reduction in a​ firm's output always result in an increase in the​ firm's average total cost​ (ATC) of​ production? A. No, a reduction in a​ firm's output will result in an increase in the​ firm's average total cost of production only if the quantities are small and the firm is producing at a level of output where its ATC curve is upward sloping. B. Yes, a reduction in a​ firm's output will always result in an increase in the​ firm's average total cost of production. C. No, a reduction in a​ firm's output will result in an increase in the​ firm's average total cost of production only if the quantities are large and the firm is producing at a level of output where its ATC curve is upward sloping. D. No, a reduction in a​ firm's output will result in an increase in the​ firm's average total cost of production only if the quantities are small and the firm is producing at a level of output where its ATC curve is downward sloping.

D

Explain why the marginal cost curve intersects the average variable cost curve at the level of output where average variable cost is at a minimum. The marginal cost curve intersects the average variable cost curve at the level of output where average variable cost is at a minimum because A. the firm begins experiencing economies of scale at this quantity. B. the firm begins benefiting from division of labor at this quantity. C. when the marginal cost of the last unit produced is​ increasing, the marginal product of labor is at a minimum. D. the firm begins experiencing diminishing returns at this quantity. E. when the marginal cost of the last unit produced is below the​ average, it pulls the average​ down, and when the marginal cost is above the​ averge, it pulls the average up.

E

Is it possible for technological change to be negative? If so, Give an example. A. no. technological change is neither positive or negative because it refers to a process B. it is possible for technological change to be negative. An example is when a firm installs more reliable equipment C. it is possible fo rtechnological change to be negative. An example is when a firm installs faster machinery. D. No. technological change is always positive because it refers to the development of new products E. it is possible for technological change to be negative. An example is when a firm hires less-skilled workers

E

Question content area Part 1 Suppose that Henry Ford had continued to experience increasing returns to​ scale, no matter how large an automobile factory he built. Discuss what the implications of this would have been for the automobile industry. Part 2 A. Ford could have profitably sold his cars at a lower price than competitors. B. Ford would have been able to produce his cars at lower​ long-run average cost than competitors. C. Ford would not have experienced diminishing returns as quickly in the production process. D. Ford would have built successively larger​ factories, incurring a higher average fixed cost of production. E. Both a and b.

E

What is the difference between total cost and variable cost in the long​ run? In the long​ run, A. the total cost of production minus the variable cost of production is the fixed cost of production. B. the variable cost of production minus the total cost of production is the fixed cost of production. C. the total cost of production equals the fixed cost of production and the variable cost of production equals zero. D. the total cost of production minus the variable cost of production is the marginal cost of production. E. the total cost of production equals the variable cost of production.

E

An exercise program makes a firm's workers more healthy and productive this ____ an example of a positive technological change

Is

Does it apply in the long run?

No

Is the amount of time that separates the short run from the long run the same for every firm?

No

With no fixed costs, when will the average total cost curve have a U shape?

With no fixed costs, the average total cost curev will have a U shape when the marginal cost curve has a U shape However, if the marginal cost curve is continually increasing, then the average total cost curve will be continually increasing

A book providing advice to entrepreneurs describes some business costs as being​ "the amount of money that will go out even if none at all comes​ in." ​Source: Tom​ Hodgkinson, Business for​ Bohemians: Live​ Well, Make Money​, New​ York: The Overlook​ Press, 2018, p. 40. a. The author isdescribing a​ business's ___cost.

fixed

The lease payment she makes to her landlord who owns the building where her store is located is a ____cost.

fixed

The payment she makes on her fire insurance is a ____ cost

fixed

The​ $300-per-month payment she makes to her local newspaper for running her weekly advertisements is a ___cost

fixed

Which of the following are implicit costs? paper wages lease payment for copy machines electricity lease payment for store foregone salary foregone interest

foregone salary and interest

Airlines are likely to have particularly ____fixed costs relative to their variable costs compared with an Old Navy clothing store or a Panera Bread restaurant.

high

If the firm's marginal costs are 5 dollars at every level of output, what shape will the firm's average total cost have? The firm's average total cost curve will be ____

horizontal

A firm cuts its workforce and is able to maintain its initial level of output this ___ an example of positive technological change

is

A training program makes a firm's workers more productiev this ___ an example of positive technological change

is

A firm is able to cut each worker's wage rate by 10 percent and still produce the same level of ouptut This ____ an example of positive technological change

is not

A firm rearranges the layout of its factory and finds that by using its initial set of inputs, it can prodcue exactly as much as before This ___ an example of positive technological change

is not

The marginal cost curve intersects both the average variable cost and the average total cost curves at their ____points

minimum

The payment she makes to buy pizza dough is a ___ cost

variable

The following problem is somewhat advanced. Using​ symbols, we can write that the marginal product of labor is equal to ΔQ/ΔL. Marginal cost is equal to ΔTC/ΔQ. Because fixed costs by definition​ don't change, marginal cost is also equal to ΔVC/ΔQ. If Jill​ Johnson's only variable cost is labor​ cost, then her variable cost is just the wage times the quantity of workers​ hired, or w×L. Part 2 If the wage Jill pays is​ constant, then what is ΔVC in terms of w and​ L?

w times Upper Delta Upper L