Production - Quiz

Use the following table to answer the next question. The total fixed cost of production is

$10.

Use the following information to answer the next question. Harvey quit his job at State University where he earned $45,000 a year. He figures his entrepreneurial talent or foregone entrepreneurial income to be $5,000 a year. To start the business, he cashed in $100,000 in bonds that earned 10 percent interest annually to buy a software company, Extreme Gaming. In the first year, the firm sold 11,000 units of software at $75 each. Of the $75, $55 goes for the costs of production, packaging, marketing, employee wages and benefits, and rent on a building. The implicit costs of Harvey's firm in the first year were

$60,000.

The following data show the relationship between total cost and output in the short run. The firm's marginal cost is equal to average total cost somewhere between units

3 and 4.

Use the following figure to answer the next question. At which point does marginal cost (MC) equal average variable cost (AVC)?

Point B

When a bakery manager reports that productivity of the 15 workers at her bakery last month was 1,800 loaves per worker, she is referring to the

average product of labor.

If the short-run average variable cost of production for a firm is decreasing, then it follows that

average variable cost must be greater than marginal cost.

In the short run, total output in an industry

can vary as the result of using a fixed amount of plant and equipment more or less intensively

Variable costs are

costs that change with the amount of output a firm produces.

Accounting profit is typically

greater than economic profit because the former does not take implicit costs into account.

Economic costs of production

include opportunity costs