Chapter 6

if the total cost of making 4 pizzas is 140 dollars, what is that average variable cost of producing four pizzas?

10 dollars

from the last problem, what is the fixed cost of producing 6 pizzas?

100 dollars

if the fixed cost is 100 dollars, how much does it cost to produce zero pizzas?

100 dollars

The units of variable input in a production process are 1, 2, 3, 4, and 5, and the corresponding total outputs are 30, 34, 37, 39, and 40, respectively. What is the marginal product of the fourth unit?

2

A farm can produce 10,000 bushels of wheat per year with five workers and 13,000 bushels with six workers. What is the marginal product of the sixth worker for this farm?

3,000 bushels

if the total cost of 5 pizzas is 160, what is the average total cost?

32

A young chef is considering opening his own sushi bar. To do so, he would have to quit his current job, which pays $20,000 a year, and take over a store building that he owns and currently rents to his brother for $6,000 a year. His expenses at the sushi bar would be $50,000 for food and $2,000 for gas and electricity. What are his explicit costs?

52,000

Which of the following is true if the total variable cost curve is rising? a. marginal cost is increasing b. marginal cost is degreasing c. average fixed cost is constant d. average fixed cost is increasing

a. marginal cost is increasing

The law of diminishing returns applies to which of the following segments of the marginal product of labor curve? a) the downward sloping segment only b)the point where labor input is zero c)the upward sloping segment only d)the entire curve

a. the downward sloping segment only

Which of the following is an example of a fixed cost for a fishing company? a. the monthly loan payments on a boat b. the supply of nets, hooks, and fishing lines c. the cost of hiring a fishing crew d. the fuel costs of running the boat

a. the monthly loan payments on a boat

Which of the following best describes total fixed cost? a. total fixed cost divided by the quantity output produced b. costs that do not vary as output varies c. total variable cost divided by the quantity of output produced d. total cost divided by the quantity of output produced e. the change in total cost when one additional unit of output is produced

b. costs that do not vary as output varies

Which of the following is considered a fixed cost of operating an automobile? a. tires b. registration fees c. oil changes d. maintenence e. gasoline

b. registration fees

Which of the following is true at the point where diminishing returns set in? a. the total product is at a minimum b. the marginal product is at a minimum c. the marginal product is at a maximum d. the total product is at a maximum

c. the marginal product is at a maximum

Diseconomies of scale exist over the range of output for which the long-run average cost curve is:

rising

If the minimum points of all possible short-run average total cost curves become successively lower as quantity of output increases:

there is economies of scale

A firm has $200 million in total revenue and explicit costs of $190 million. Suppose its owners have invested $100 million in the company at an opportunity cost of 10 percent interest per year. What is the firm's economic profit?

zero

Which of the following is true? a. When marginal cost is below average cost, average cost falls. b. When marginal cost is equal to average cost then average cost is at its minimum. c. When marginal cost is above average cost, average cost rises. d. all of the above are true

d. all of the above are true

The situation in which the marginal product of labor is greater than zero and declining as more labor is hired is called the law of

diminishing returns

In the long run, total fixed cost:

does not exist

An economist left her $100,000-a-year teaching position to work full-time in her own consulting business. In the first year, she had total revenue of $200,000 and business expenses of $150,000. She made an: a) economic loss b)economic profit c) implicit profit d)accounting loss but not an economic loss

economic loss

The decreasing portion of a firm's long-run average cost curve is attributable to:

economies of scale