Chapter 7 - Production, Costs, and Industry Structure

Use the table above to answer the following question. What value should fill Blank A?

$42

You quit your current job as an accountant in which you earn $60,000 per year to open an economic consulting business in which you earn $125,000 per year. To run your economic consulting business, you pay $15,000 annually to rent office space and $35,000 annually in salary to your assistant. What are your implicit costs of running your economic consulting business?

$60000

You quit your current job as an accountant in which you earn $60,000 per year to open an economic consulting business in which you earn $125,000 per year. To run your economic consulting business, you pay $15,000 annually to rent office space and $35,000 annually in salary to your assistant. What is the accounting profit for your economic consulting business?

$75000

Use the table above to answer the following question. What value should go in Blank E?

$12

____________ are expenditures that a firm must make before production begins and that do not change regardless of the production level.

Fixed costs

Use the graph above to answer the following question. Which of the following statements is correct?

The transition point between marginal cost pulling down average total cost and pulling up average total cost always occurs at the minimum point of the average total cost curve

The average total cost curve is _______________.

u-shaped

_____________ describes a situation in which the long-run average cost of producing output increases as total output increase.

Diseconomies of scale

_____________ are out-of-pocket costs. They typically have receipts.

Explicit costs

Which of these describes how to calculate marginal cost?

Total fixed cost divided by total quantity of output