Microeconomics chapter 7
Teds lawn care has total variable cost of $100,000 when output is 50,000 units. When outputs is increased to 100,000 units, the total variable costs increase to $175,000. What is Ted's Lawn Care's marginal cost?
$1.50
Teds Lawn Care has total fixed cost of $300,000 total, variable Costs of 200,000, and an output of $50,000 units. What is Teds lawn care Average total cost?
$10
If carolyn owns $10,000 work of stock in Omega Construction and Omega loses a lawsuit for $50 million, what is the greatest amount that Carolyn can lose in that suit?
$10,000
Sullivan landscaping had a profit of 10,000 in 2009. If its total revenue was 200,000, what was its total cost
190,000
Teds lawn care hires another employee to mow lawns. After this employee starts working, the company production increases from 200 to 220 lawn mowed each week. What is the marginal product in this case?
20
At _______ levels of output, the average total cost curves slopes downward, reflecting increasing returns as average costs drop
relatively low
Teds lawn care hires a new employee. If marginal returns increase after this person is hired, average product ______, and Marginal product ______
Increases; increases
What would be the concern of the investors in a business where the normal profit equals zero?
Investors would not be concerned because this is a benchmark for a normal rate of return on capital over the long run
Willco manufacturing has made the decision to increase output. What will happen to the average fixed cost as the output increases?
It will decrease
______ plants have relatively higher short run average total costs at lower levels of output
Larger
Diminishing marginal returns occur when
an addtional worker adds to total output but at a decreasing rate.
______ cost falls continously as more output is produced
average fixed
This is total output divided by the number of workers
average product
When eight weavers are employed, and the output is 80 baskets, ________ is equal to 10 baskets
average product
As output increases, _______ cost will decrease to a certain point and then increase
average total
As output increases, ____________ cost will decrease to a certain point and then increase
average variable
A company has diminsishing marginal returns. If the third worker adds 7 units to total production, how much does the fourth worker add to total production?
between 1 and 6 units
Economic costs and accounting costs differ because economists include
both explicit and implicit costs
Average product is
calculated by dividing the total output by the number of workers
Teds lawn care hires a new employee and then sees diminishing marginal returns. In this case, Total output ________ at an _________ rate.
increases; diminishing
_____ marginal returns occur when a new worker adds more to total output than the previous new worker does
increasing
The third worker adds 7 units to total production. When the fourth worker is hired, she adds 18 units to total production. The company has:
increasing marginal returns
Total production is 2 units when the first worker is hired. Total production is 5 units when the second worker is hired and rises to 10 units when the third worker is hired. The company has
increasing marginal returns
Whay would be the concern of the investors in a business where the normal profit equals zero
investors would not be concerned because this is a benchmark for a normal rate of return on capital over the long run
The marginal product curve always crossed the average product curve at:
its highest point
in the short run, output for an existing plant will vary by the amount of
labor employed
Which of these is a fixed cost
lease payments for a supermarket
Which of these examples is a fixed cost?
liability insurance for a lawn care company
typically, businessess that require large amounts of capital need more time to make _______ adjustments
long run
What illustrates the lowest unit cost at which any particular output can be produced in the long run
long run average total cost
Typically, businesses that require large amounts of capital need more time to make adjustments
long-run
In 1906, Will keith Kellog founded the Battle Creek Toasted Corn Flake Company, better known today as Kellogs, from a company with only 44 employees, Kellogg's has grown to have thousands of stockholder. Kelloggs is a
corporation
In 1906, Will keith Kellog founded the battle Creek toasted Corn Flake Company, better known today as Kellogs. From a company with only 44 employees, Kelloggs has grown to have thousands to stockholders. Kelloggs is a
corporation
Sunk costs are
costs that have already been incurred and cannot be recovered
Teds lawn care has made the decision to increase output. As output increases, average total cost will:
decrease to a certain point and then increase
Teds lawn care has made the decision to increase output. As output increases, average variable cost will
decrease to a certain point and then increase
The ninth worker adds 5 units to total production. When the tenth worker is hired, he adds 2 units to total production. The company has
diminishing marginal returns
The third worker adds 5 units to total production. When the fourth worker is hired, she adds 1 unit to total production. The company has
diminishing marginal returns
Total production is 12 units when the third worker is hired. Total production is 20 units when the fourth worker is hired and rises to 25 units when the fifth worker is hired. The company has
diminishing marginal returns
Total production is 18 units when the third worker is hired. Total production is 28 units when the fourth worker is hired and rises to 29 units when the fifth worker is hired. The company has
diminishing marginal returns
An additional worker adds less to total output than the previous worker hired
diminishing returns
In May 2011, Bayer announced that it was open to mergin with another pharmaceutical firm. Jim Edwards, writing for BNET, an online business magazine, said that such a merger would benefit bayer but not Bayers merger partner. He wrote, "Once a drug company reaches a certain size there are built in inefficiencies that no amount of cost cutting can get rid of." Edwards is referring to:
diseconomies of scale
When a firm has _______, its long run average total costs increased with increased output
diseconomies of scale
If hiring Kristen causes average product to increase, Kristens ________ must be above current average product
marginal product
Joe notices that when he hires another worker, the number of cars his company wash increases
marginal product
This is the change in total output divided by the change in the number of workers
marginal product
The process of turning inputs into outputs is known as
production
Which of these examples is a fixed cost?
property taxes for an industrial warehouse
The long run is best defined as a time period
during which all inputs can be varied
Walmart undersells its competitors. In part, this is because of:
economies of scale
Wilco manufacturing undersells its competitors because its higher production levels have decreased its long run average total costs. This is because of
economies of scale
When a firm has ______, its long run average total costs decrease with increased output
economomies of scale
Which of these examples is a variable cost
electricity cost for a theater
Total cost can be calculated by adding
fixed cost and variable cost
Total cost can be calculates by adding
fixed cost and variable cost
________ cost refer to all of the opportunity cost of using resources that belong to the firm
implicit
Have you ever had a famous amos cookie? Wally Amos already had a reputation for baking great cookies when he opened a cookie store in Los Angeles. By its second year of operation, the store was doing over $1 million in sales. Amos, the only owner, is running a
sole Proprietorship
Have you ever had a famous Amos cookie? Wally Amos already had a reputation for baking great cookies when he opened a cookie store in Los Angeles. By its second year of operation, the store was doing over $1 million in sales. Amos, the only owner, is running a:
sole propreitorship
Which business organization typically has a single owner that has unlimited liability
sole proprietorship
A partnership is
subject to unlimited liability
_____ costs are cost that have already been incurred and cannot be recovered
sunk
______ costs are costs that have already been incurred and cannot be recovered
sunk
A sole propreitorship is a business
that consists of a single owner who supervises and manages the business and is subject to unlimited liability
Marginal product is:
the change in output that results from a change in labor
Marginal cost is defined as
the change in total costs from producing one more unit of output
One thing that distinguishes the short run and the long run is
the existence of at least one fixed input
The marginal cost curve often decreases at first and then starts in increase
the law of diminishing returns
Which of these examples is a fixed cost
the monthly payment on a one year lease on a vehicle
Which of these is an implicit cost?
the salary and benefits the owner could have earned in her former profession
which of these is an implicit cost
the salary and benefits the owner could have earned in her former profession
What is a disadvantage of a sole proprietorship?
the subjection of personal assets to unlimited liability
Willco manufacturing hires a new employee, after which it sees negative marginal returns. in this case
total output decreases
A company has diminishing marginal returns. Total production is 10 units when the first worker is hired. Total production rises to 15 units when the second worker is hired. What happens to total production when the third worker is hired if the company continues to have diminishing marginal returns?
total production is between 16 and 19 units
Economic profit is
typically lower than accounting profit
In 1906, Will keith kellogg founded the battle creek toasted corn flake company, better known today as kellogg's. From a company with only 44 employees, Kelloggs has grown to have thousands of stockholders. Kellogg's is a
Corporation
Which business organization can issue stock to raise capital
Corporation
If LMS Manufacturing sold 300,000 units and its total revenue was $900,000, what was the price per unit?
$3
Teds Lawn care has total variable cost of $200,000 when output is 75,000 units. When output increases to 100,000 units, the total variables cost increase to $275,000. What is Ted's Lawn Care's marginal cost of producing these additional units
$3
If LMS manufacturing sells 250,000 units and its total revenue is $1 million, what is the price per unit?
$4
Ted's Lawn Care has total variable costs of $200,000 and an output of $50,000 units. What is Ted's Lawn Cares average variable cost
$4
Sullivan landscaping had a profit of $20,000 in 2009. If the total revenue was $540,000 what was its total cost?
$520,000
If LMS manufacturing sells 250,000 units and its total revenue is $1 million, what is the price per unit?
4
A company has increasing marginal returns. If the third worker adds 4 units to total production, how much must the fourth worker add to total production to keep marginal returns increasing
5 or more units
In August 2009, Kansas-based Brooke corporation was facing a multimillion-dollar lawsuit. The company used to be one of the largest providers of insurance services that small banks could sell to their customers. Suppose you owned $5,000 worth of Brooke stock. What would be the maximum you could lose if the suit went against Brooke?
5,000
Wilco manufacturing produces 210 units and employs 30 workers. What is the average product
7
Suppose Jiang and his partner, Shelby, run a small coffee shop. The coffee shop sold $10,000 worth of goods last month, and it cost $3,000 to make those goods and operate the shop. During this time, Jiang could have been working at a desk job for $5,000 a month. What was Jiangs accounting profit?
7,000
The following table shows the total product of labor for adams business, Santa Monica Artisan cheeses. What is the average product when the fourth employees is hired
7.00
Suppose that Teds lawn Care employs 30 workers and mows 240 lawns each week. What is the Average product?
8
A company has increasing marginal returns. If the third worker adds 7 units to total production, how much must the fourth worker add to total production to keep marginal returns increasing>
8 or more units
_____ cost fallsd continuously as more outputs is produced
Average fixed
________ is the output per worker
Average product
Which of these statements are not true about economic profit
In order to sustain a business in the long run, economic profit must be greater than zero
Which of these statements are not true about economic profit?
In order to sustain a business in the long run, economic profit must be greater than zero
Which of these statements are not true about economic profit?
In order to sustain a business in the long run, economic profit must be greater than zero.
Which business organization has unlimited liability and more than one owner?
Partnership
The process of turning inputs into outputs is known as
Production
Which of these is an implicit cost?
The salary and benefits the owner could have earned in her former profession
______ costs include both out of pocket expenses and opportunity costs
Total
A company has diminishing marginal returns. Total production is 5 units when the first worker is hired. Total production rises to 11 units when the second worker is hired. What should happen to total production when the third worker is hired if the company continues to have diminishing marginal returns?
Total production should be between 12 and 16 units
which of these examples if a fixed cost
a one year lease payment on office equipment
Increasing marginal returns occur when a new worker adds ______ to total output than the previous new worker does
more
As more workers are hired, total output falls, and a business experiences
negative returns
A firm that is generating zero economic profit after implicit costs are factored in is earning profits
normal
Economic costs and accounting costs differ because accountants include
only explicit costs
A firm is an economic institution that transforms resources into _______ for consumers
output
