Microeconomics Quiz 8 (Chapter 13)
Production function
shows the relationship between the quantity of inputs used to produce a good and the quantity produced of that good
Katherine gives piano lessons for $15 per hour. She also grows flowers, which she arranges and sells at the local farmer's market. One day she spends 5 hours planting $50 worth of seeds in her garden. Once the seeds have grown into flowers, she can sell them for $150 at the farmer's market. Katherine's accounting profits from selling flowers are
$100, and her economic profits are $25.
The Carolina Christmas Tree Corporation grows and sells 500 Christmas trees. The average cost of production per tree is $50. Each tree sells for a price of $65. The Carolina Christmas Tree Corporation's total revenues are
$32,500
Economics of scale
ATC falls as Q increases
Diseconomies of scale
ATC rises as Q increases
Constant returns to scale
ATC stays the same as Q increases
For a large firm that produces and sells automobiles, which of the following costs would be a variable cost? a. the cost of the steel that is used in producing automobiles b. All of these answers are correct. c. the cost of the electricity of running the machines on the factory floor d. the unemployment insurance premium that the firm pays to the state of Missouri is calculated based on the number of worker-hours that the firm uses
All of these answers are correct
Fixed Costs
Costs that do not vary with the quantity of output produced
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 increases
A firm that produces and sells furniture gets to choose
How many workers to hire in both short run and the long run
Economies of scale occur when
Long run average total costs fall as output increases
The cost of producing an additional unit of output is the firm's
Marginal Cost
Economists normally assume that the goal of a firm is to
Maximize its profits
Variable Costs
costs that vary with the quantity of output produced
Implicit Costs
input costs that do not require an outlay of money by the firm
Explicit costs
input costs that require an outlay of money by the firm
Marginal product
the increase in output that arises from an additional unit of input
Marginal Cost
the increase in total cost that arises from an extra unit of production
Diminishing Marginal product
the marginal product of an input declines as the quantity of the input increases
Economic Profit
total revenue minus total cost, including both explicit and implicit costs
Accounting Profit
total revenue minus total explicit cost