ECO 202 Chapter 9

Vipsana's Gyros House sells gyros. The cost of ingredients (pita, meat, spices, etc.) to make a gyro is $2.00. Vipsana pays her employees $60 per day. She also incurs a fixed cost of $120 per day. What is Vipsana's total cost per day when she does not produce any gyros and does not hire any workers?

$120

Refer to Figure 11-1. The marginal product of the 3rd worker is

15.

Refer to Table 11-1. What is the average product of labor when the farm hires 5 workers?

10.8 bushels

Refer to Figure 11-2. Short run output is maximized at

L3.

Which of the following statements is true?

The average product of labor is at its maximum when the average product of labor equals the marginal product of labor.

Refer to Figure 11-2. Diminishing returns to labor set in

after L1.

A characteristic of the long run is

all inputs can be varied.

Diminishing marginal product of labor occurs when adding another unit of labor

changes output by an amount smaller than the output added by the previous unit of labor.

Refer to Figure 11-1. The average product of the 4th worker

is 17

A firm has successfully adopted a positive technological change when

it can produce more output using the same inputs.

If marginal product is greater than average product, then

marginal product could either be increasing or decreasing.

If production displays increasing marginal returns, then

each new worker hired adds more to output than previous hires.

Economic costs of production differ from accounting costs in that

economic costs add the opportunity costs of a firm using its own resources while accounting costs do not.

The average total cost of production

equals total cost of production divided by the level of output.

Which of the following is an implicit cost of production?

rent that could have been earned on a building owned and used by the firm

Increases in the marginal product of labor result from

the division of labor and specialization

Refer to Figure 11-2. The curve labeled "E" is

the marginal product curve.

Gertrude Stork's Chocolate Shoppe normally employs 4 workers. When the Chocolate Shoppe hired a 5th worker the Shoppe's total output decreased. Therefore

the marginal product of the 5th worker is negative.

The production function shows

the maximum output that can be produced from each possible quantity of inputs.

Vipsana's Gyros House sells gyros. The cost of ingredients (pita, meat, spices, etc.) to make a gyro is $2.00. Vipsana pays her employees $60 per day. She also incurs a fixed cost of $120 per day. Calculate Vipsana's variable cost per day when she produces 50 gyros using two workers?

$220

Refer to Table 11-1. Diminishing marginal returns sets in when the ________ worker is hired.

3rd

Refer to Table 11-1. What is the marginal product of the 4th worker?

5 pounds

If 11 workers can produce a total of 54 units of a product and a 12th worker has a marginal product of 6 units, then the average product of 12 workers is

5 units

An explicit cost is defined as

a cost that involves spending money.

Which of the following is a fixed cost?

payment to hire a security worker to guard the gate to the factory around the clock