HOMEWORK 9
17. Refer to Scenario 13-7. Julia's economic profits are
$125,000
16. Scenario 13-7 Julia prepares tax returns and does bookkeeping. Last year her revenues from the tax and bookkeeping business were $150,000, and her expenses for the business were $15,000. When she started her tax and bookkeeping business, Julia gave up her supplemental job doing in-home pet sitting. She used to earn $10,000 per year from pet sitting. Assume that she incurred no costs for her pet sitting business. Refer to Scenario 13-7. Julia's accounting profits are
$135,000
30. David's firm experiences diminishing marginal product for all ranges of inputs. The total cost curve associated with David's firm
gets steeper as output increase
3. Economists normally assume that the goal of a firm is to(i) earn profits as large as possible, even if it means reducing output.(ii) earn revenues as large as possible, even if it means reducing profits.(iii) minimize costs, regardless of profits
ii and iii only
15. Economic profit
will never exceed accounting profit
6. If Kevin's children run a lemonade stand for a day and sell 200 glasses of lemonade at $0.50 each, their total revenues are
$100
13. 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 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?
$5000
27. Table 13-6 Refer to Table 13-6. 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?
$520
9. Ryan sells 200 plastic ball point pens at $0.50 each. His total costs are $25. His profits are
$75
24. Table 13-2 Refer to Table 13-2. What is the marginal product of the third worker?
100 units
20. Kate is a florist. Kate can arrange 20 bouquets per day. She is considering hiring her husband William to work for her. Together Kate and William can arrange 35 bouquets per day. What is William's marginal product?
15 bouquets
23. Eldin is a house painter. He can paint three houses per week. He is considering hiring his friend Murphy. Together, Eldin and Murphy can paint five houses per week. What is Murphy's marginal product?
2 houses
25. Refer to Table 13-2. At which number of workers does diminishing marginal product begin?
2dimin
22. 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
8 units of output
7. The amount of money that a firm pays to buy inputs is called.
Total cost
1. Analyzing the behavior of the firm enhances our understanding of
What decisions lie behind the market supply curve
29. Figure 13-3 Refer to Figure 13-3. The changing slope of the total cost curve reflects
decreasing marginal product
26. When adding another unit of labor leads to an increase in output that is smaller than the increases in output that resulted from adding previous units of labor, the firm is experiencing
diminishing marginal product
14. Total revenue minus both explicit and implicit costs is called
economic profit
12. Pete owns a shoe-shine business. Which of the following costs would be implicit costs? (i) shoe polish (ii) rent on the shoe stand (iii) wages Pete could earn delivering newspapers (iv) interest that Pete's money was earning before he spent his savings to set up the shoeshine business
iii & iv only
18. Suppose that Christine owns her own CPA firm. She uses only two inputs in her business: her hours worked (labor) and a computer (capital). In the short run, Christine most likely considers
labor to be variable and capital to be fixed
2. Economists assume that the typical person who starts her own business does so with the intention of
maximizing profits
10. The things that must be forgone to acquire a good are called
opportunity costs
21. The marginal product of labor can be defined as the change in
output divided by the change in labor
4. Total revenue equalsa. price x quantity.b. price/quantity.c. (price x quantity) - total cost.d. output - input.
price x quantity
19. A production function is a relationship between inputs and
quantity of output
28. A total-cost curve shows the relationship between the
quantity of output produced and the total cost of productiondecreasin
11. Explicit costs
require an outlay of money by the firm
5. The amount of money that a firm receives from the sale of its output is called
total revenue
8. Profit is defined as
total revenue minus total cost