Homework #5 Chapter 14

The Three Amigo's company produced and sold 500 dog beds. The average cost of production per dog bed was $15. Each dog bed can be sold for a price of $65. The Three Amigo's total costs are A. $7,500. B. $25,000. C. $32,500. D. $67,500.

A. $7,500.

Let L represent the number of workers hired by a firm, and let Q represent that firm's quantity of output. Assume two points on the firm's production function are (L = 12, Q = 122) and (L = 13, Q = 130). Then the marginal product of the 13th worker is A. 8 units of output. B. 10 units of output. C. 122 units of output. D. 132 units of output.

A. 8 units of output.

A firm produces 400 units of output at a total cost of $1,200. If total variable costs are $1,000, A. average fixed cost is 50 cents. B. average variable cost is $2. C. average total cost is $2.50. D. average total cost is 50 cents.

A. average fixed cost is 50 cents.

Total revenue equals A. price × quantity. B. price/quantity. C. (price × quantity) − total cost. D. output − input.

A. price × quantity.

If a firm uses labor to produce output, the firm's production function depicts the relationship between A. the number of workers and the quantity of output. B. marginal product and marginal cost. C. the maximum quantity that the firm can produce as it adds more capital to a fixed quantity of labor. D. fixed inputs and variable inputs in the short run.

A. the number of workers and the quantity of output.

Carol Anne makes candles. If she charges $20 for each candle, her total revenue will be A. $1,000 if she sells 100 candles. B. $500 if she sells 25 candles. C. $20 regardless of how many candles she sells. D. $200 if she sells 5 candles.

B. $500 if she sells 25 candles.

Refer to Table 14-1. What is the total output when 1 worker is hired? A. 10 B. 30 C. 45 D. 75

B. 30

Pete owns a shoe-shine business. His accountant most likely includes which of the following costs on his financial statements? A. Shoe polish and wages Pete could earn delivering newspapers B. Shoe polish and rent on the shoe stand C. Wages Pete could earn delivering newspapers and interest that Pete's money was earning before he spent his savings to set up the shoe-shine business D. Rent on the shoe stand and interest that Pete's money was earning before he spent his savings to set up the shoe-shine business

B. Shoe polish and rent on the shoe stand

Refer to Table 14-7. What is the value of E? A. $25 B. $50 C. $100 D. $150

C. $100

Matius sells 500 candy bars at $0.50 each. His total costs are $125. His profits are A. $25. B. $124.50. C. $125. D. $150.

C. $125.

Jacqui decides to open her own business and earns $50,000 in accounting profit the first year. When deciding to open her own business, she withdrew $20,000 from her savings, which earned 5 percent interest. She also turned down three separate job offers with annual salaries of $30,000, $40,000, and $45,000. What is Jacqui's economic profit from running her own business? A. −$56,000 B. −$6,000 C. $4,000 D. $19,000

C. $4,000

Refer to Table 14-5. Each worker at the Wooden Chair Factory costs $12 per hour. The cost of each machine is $20 per day regardless of the number of chairs produced. What is the total daily cost of producing at a rate of 55 chairs per hour if the factory operates 8 hours per day? A. $480 B. $576 C. $520 D. $616

C. $520

Refer to Table 14-3. The marginal product of the second worker is A. 90 units. B. 85 units. C. 80 units. D. 20 units.

C. 80 units.

A difference between explicit and implicit costs is that A. explicit costs must be greater than implicit costs. B. explicit costs do not require a direct monetary outlay by the firm, whereas implicit costs do. C. implicit costs do not require a direct monetary outlay by the firm, whereas explicit costs do. D. implicit costs must be greater than explicit costs.

C. implicit costs do not require a direct monetary outlay by the firm, whereas explicit costs do.

Suppose that a "doggie day care" firm uses only two inputs: hourly workers (labor) and a building (capital). In the short run, the firm most likely considers A. both labor and capital to be fixed. B. both labor and capital to be variable. C. labor to be variable and capital to be fixed. D. capital to be variable and labor to be fixed.

C. labor to be variable and capital to be fixed.

An example of an explicit cost of production would be the A. cost of forgone labor earnings for an entrepreneur. B. lost opportunity to invest in capital markets when the money is invested in one's business. C. lease payments for the land on which a firm's factory stands. D. value of the time the business could've spent producing something else.

C. lease payments for the land on which a firm's factory stands.

Tom's Tent Company has total fixed costs of $300,000 per year. The firm's average variable cost is $80 for 10,000 tents. At that level of output, the firm's average total costs equal A. $80 B. $90 C. $100 D. $110

D. $110

As Bubba's Bubble Gum Company adds workers while using the same amount of machinery, some workers may be underutilized because they have little work to do while waiting in line to use the machinery. When this occurs, Bubba's Bubble Gum Company encounters A. economies of scale. B. diseconomies of scale. C. increasing marginal product. D. diminishing marginal product.

D. diminishing marginal product.