Graded Homework - Chapter 11

(Table: Costs of Producing Bagels) Use Table: Cost of Producing Bagels. The average total cost of producing 2 bagels is: $0.40. $0.10. $0.20. $0.05.

$0.20

(Problem 4a) For the given level of output, calculate the average fixed cost (AFC), average variable cost (AVC), and average total cost (ATC) per cup of frozen yogurt. When 270 cups are produced, AFC is _____, AVC is _____, and ATC is _____. $0.37; $1.39; $1.76 $0.33; $1.39; $1.76 $0.37; $1.76; $1.39 $0.33; $1.35; $1.74

$0.37; $1.39; $1.76

(Table: Cakes) Use Table: Cakes. Pat is opening a bakery to make and sell special birthday cakes. She is trying to decide how many mixers to purchase. Her estimated fixed and average variable costs if she purchases 1, 2, or 3 mixers are shown in the table. Assume that average variable costs do not vary with the quantity of output. If Pat purchases 1 mixer and bakes 200 cakes per day, what is her average total cost? $5 $200 $15 $1,000

$15

(Figure and Table: Variable, Fixed, and Total Costs) Use Figure and Table: Variable, Fixed, and Total Costs. The marginal cost of increasing production from 51 to 64 bushels of wheat is: $16.00. $18.75. $15.38. $12.50.

$15.38

(Figure: Short-Run Costs II) Use Figure: Short-Run Costs II. At 6 units of output, average total cost is approximately: $100. $250. $120. $170.

$170

A business produces 10 pairs of eyeglasses. It incurs $30 in average variable cost and $35 in average total cost. The total fixed cost of producing 10 pairs of eyeglasses is: $3. $35. $300. $50.

$50.

(Table: Total Product and Marginal Product) Use Table: Total Product and Marginal Product. The marginal product of the second worker is _____ units per period.

20

(Problem 4d). How many cups of frozen yogurt are produced when average total cost is minimized? 300 325 270 200

270

(Table: Production of Bagels) Use Table: Production of Bagels. The marginal product of the fifth worker is _____ bagels. 12,000 5,000 10,000

9,000

(Figure: Marginal Product of Labor) Use Figure: The Marginal Product of Labor. The total product of labor for eight workers is _____ bushels.

96

(Problem 4c) What principle explains why the AFC declines as output increases? What principle explains why the AVC increases as output increases? Both AFC and AVC decline due to the spreading effect. AFC declines due to the spreading effect; AVC increases due to the diminishing returns effect. AFC declines due to the diminishing returns effect; AVC increases due to the spreading effect. Both AFC and AVC increase due to the diminishing returns effect.

AFC declines due to the spreading effect; AVC increases due to the diminishing returns effect

(Problem 4b) The diagram shows the AFC, AVC, and ATC curves. Choose the statement that correctly identifies the curves. Curve C is the AVC curve. Curve A is the AVC curve. Curve A is the ATC curve. Curve B is the ATC curve.

Curve A is the ATC curve

(Problem 3b)The diagram shows Marty's variable cost curve and his total cost curve. Correctly identify each curve. Curve A is the total cost curve and Curve B is the marginal cost curve. Curve A is the variable cost curve and Curve B is the fixed cost curve. Curve A is the total cost curve and Curve B is the variable cost curve. Curve B is the total cost curve and Curve A is the variable cost curve.

Curve A is the total cost curve and Curve B is the variable cost curve

Marginal cost _____ over the range of increasing marginal returns and _____ over the range of diminishing marginal returns. decreases; increases increases; decreases increases; is constant is constant; decreases

Decreases; increases

(Problem 2a) What are the fixed inputs and variable inputs in the production of cups of frozen yogurt? Choose the correct statement. Frozen-yogurt machines are a fixed input. Frozen-yogurt mix is a fixed input. Workers are a fixed input. Frozen-yogurt machines are a variable input.

Frozen-yogurt machines are a fixed input.

(Problem 3c)What is the marginal cost per cup for the first 110 cups of yogurt? For the next 90 cups? Marginal cost for the first 110 cups of yogurt is $135, and then falls to $125 for the next 90 cups. Marginal cost for the first 110 cups of yogurt is $1.23 per cup, and then rises to $1.64 per cup for the next 90 cups. Marginal cost for the first 110 cups of yogurt is $1.39 per cup, and then falls to $1.23 per cup for the next 90 cups. Marginal cost for the first 110 cups of yogurt is $1.23 per cup, and then rises to $1.39 per cup for the next 90 cups.

Marginal cost for the first 110 cups of yogurt is $1.23 per cup, and then rises to $1.39 per cup for the next 90 cups.

(Problem 2c) What is the marginal product of the first worker? The second worker? The third worker? Why does the marginal product of labor (MPL) decline as the number of workers increases?

The marginal product of labor is 110 cups for the first worker, 90 cups for the second worker, and 70 cups for the third worker. The MPL declines due to the principle of diminishing returns to labor.

(Problem 2b) Sketch the total product curve. Put the quantity of labor on the horizontal axis and the quantity of frozen yogurt on the vertical axis. Based on your graph, choose the correct statement.

The total product curve is upward sloping, but not a straight line

In the short run, the average total cost curve slopes upward because of: diseconomies of scale. diminishing returns. increasing returns. economies of scale.

diminishing returns

When marginal cost is BELOW average variable cost, average variable cost must be: at its minimum. rising. falling. at its maximum.

falling.

Once diminishing returns have set in, as output increases, the total cost curve: becomes horizontal. gets flatter. increases at first, and then decreases. gets steeper.

gets steeper

If your firm is operating in the negatively sloped portion of a long-run average total cost curve, then your production exhibits: higher wages. increased input prices. increasing returns to scale. decreasing returns to scale.

increasing returns to scale

You own a deli. Which input of production is MOST likely fixed at your deli? the tomato sauce used to make soups the dining room the employees the bread used to make sandwiches

the dining room

Buford Bus Manufacturing installs a new assembly line. As a result, the output per worker increases. The marginal cost of output at Buford: is at its maximum. will be unchanged. will decrease (the MC curve will shift down). will increase (the MC curve will shift up).

will decrease (the MC curve will shift down).