chapter 7 cost of production

Exhibit 7-5 Output per day Workers per day Total cost 0 0 $10 5 1 20 15 2 30 18 3 40 20 4 50 In Exhibit 7-5, what is fixed cost at 20 units of output? $0 $10 $40 it is impossible to calculate fixed cost unless we know the daily wage it is impossible to calculate fixed cost unless we know variable cost at Q = 15

$10

Suppose Ernie gives up his job as financial advisor for P.E.T.S., at which he earned $30,000 per year, to open up a store selling spot remover to Dalmatians. He invested $10,000 in the store, which had been in savings earning 5 percent interest. This year's revenues in the new business were $50,000, and explicit costs were $10,000. Calculate Ernie's economic profit. $10,000 $50,000 $20,000 $40,000 $9,500

$9,500

Which of the following is a fixed cost of preparing meals? dishwasher detergent chicken salad a microwave oven electricity

a microwave oven

All other things constant, higher implicit cost results in lower accounting profit. true or false

false

Total cost is calculated as average fixed cost plus average variable cost fixed cost plus variable cost the additional cost of the last unit produced marginal cost plus variable cost marginal cost plus fixed cost

fixed cost plus variable cost

With respect to the average cost curves, the marginal cost curve intersects average total cost, average fixed cost, and average variable cost at their minimum points intersects average total cost, average fixed cost, and average variable cost at their maximum points intersects both average total cost and average variable cost at their minimum points intersects average total cost where it is increasing and average variable cost where it is decreasing intersects only average total cost at its minimum point

intersects both average total cost and average variable cost at their minimum points

The additional output obtained by adding another unit of labor to the production process is called the marginal cost of labor the average output of labor a variable cost the marginal product of labor the marginal utility of labor

the marginal product of labor

The shape of short-run variable cost curve is determined by the firm's effort to minimize cost the firm's effort to maximize profit competition in the industry the marginal productivity of the variable inputs the firm uses the money the firm spends

the marginal productivity of the variable inputs the firm uses

If a firm is experiencing diminishing marginal returns, its marginal product is declining. true or false

true

In the long run, all inputs are variable. True False

true