Production and Costs

Pilar's taco trucks sells about 400 various tacos per day for an average price of $5. On average, each tacos cost $3 (includes labor, materials and miscellaneous), Pilar's profit margin is ________. Responses $2,000. $1,200 $800. $2 per taco

$2 per taco

Nisha's chicken-on-a-stick food truck sells about $500 various chicken combo platters per day with an average price of $8. On average, each chicken platter cost $5 (this includes labor, materials and miscellaneous). Nisha's profit margin is ________. $312 $3 per chicken platter $2,500

$3 per chicken platter

When this company produces 3 units, the average total and average variable costs are respectively $87.50; $37 $75; $42 $75; $50.75

$75; $42 AVC=vc/q ATC=Tc/q

Which of the following statements is true about accounting profit? A-Because economic cost includes implicit and explicit costs, accounting profit is higher than economic profit. B-Because economic cost includes only implicit costs, accounting profit is higher than economic profit. C-Because economic cost includes only implicit costs, accounting profit is lower than economic profit. D-Because economic cost includes explicit and implicit costs, accounting profit is lower than economic profit.

A-Because economic cost includes implicit and explicit costs, accounting profit is higher than economic profit. Accounting profit = Revenue - Explicit cost. Economic Profit = Revenue (sales) - Cost (all opportunity costs)

Danielle wants to expand her business and use the 10 acre property she owns and rents to a local sheep rancher for $10,000/year, to build a mall for $4 million. Danielle's total economic costs of the expansion plan are A-the $10,000 in foregone rent and the $4 million cost of the mall. B-All costs as reported by Danielle's accountant. C-the foregone $10,000/year from the sheep rancher. D-the $4 million cost of the mall construction and its fixed costs.

A-the $10,000 in foregone rent and the $4 million cost of the mall.

The table below shows cost data for WipeOutSki Company, which manufactures skis for beginners. If the company's fixed costs are $30, what is the marginal cost of five units of output? A-$45.00 B-$30.00 C-$25.00

B-$30.00

According to the following cost information, marginal cost and average total cost are equal when the firm produces ________. A-3 units. B-6 units C-1 unit. D-5 units.

B-6 units ATC = $225/3 = $75 and MC = $450-375 = $75

One of the following statements accurately defines production function. Which statement does this? A-Workers weekly time schedules in a manufacturing plant for the last ten years. B-A math equation representing the amount of output that can be produced with the amount of inputs available at a company. C-A spreadsheet indicating the price of fixed costs for a firm over time represented in a graph.

B-A math equation representing the amount of output that can be produced with the amount of inputs available at a company.

If there are substantial economies of scale in a market, A-a large firm will have lower total cost than a smaller one. B-a large firm will have lower average cost than a smaller one. C-a large firm will have higher average cost than a smaller one.

B-a large firm will have lower average cost than a smaller one.

The term ________ is used to describe the additional cost of producing one more unit. A-average cost. B-marginal cost C-variable cost. D-fixed cost

B-marginal cost

The table below shows cost data for WipeOutSki Company, which manufactures skis for beginners. If the company's fixed costs are $30, what is the average variable cost at two units of output? A-$22.50 B-$15.00 C-$12.50 D-$55.00

C-$12.50 =25/2

When an owner uses resources they own in a business, that usage should be considered ________. A-an explicit cost B-a direct cost C-an implicit cost

C-an implicit cost -opportunity cost

Accounting profit is A-lower than economic profit because economic cost includes only implicit costs. B-higher than economic profit because economic cost includes only implicit costs. C-higher than economic profit because economic cost includes implicit and explicit costs. D-lower than economic profit because economic cost includes explicit and implicit cost

C-higher than economic profit because economic cost includes implicit and explicit costs.

In the long run, firms try to decide which combination of technology, capital, labor and other resources they should use in order to A-maximize the use of labor. B-maximize the use of capital. C-minimize cost and maximize profit. D-maximize the use of new technology.

C-minimize cost and maximize profit.

Which of the following is most likely to be a fixed cost? A-shipping charges B-expenditure for raw materials C-mortgage payments D-wages paid to an unskilled labor

C-mortgage payments

When an economist uses the term "technology," what they mean is A-the labor used to produce a product. B-the equipment used to produce a product. C-the specific processes used to produce a product. D-Hardware and software.

C-the specific processes used to produce a product.

The table below shows cost data for WipeOutSki Company, which manufactures skis for beginners. If the company's fixed costs are $30, what is the marginal cost in C? A-$15.00 B-$6.67 C-$25.00 D-$20.00

D-$20.00 total cost / change in quantity produced. =((135-45)-30)/3

Look at the following graph and production schedule. At which additional worker does diminishing returns begin? A-4 B-5 C-6 D-3

D-3

Ads and More, an advertising agency, recently expanded their offices as their 3 year lease came to an end. Which best describes Ads and More's situation as its new lease was signed? A-Ads and More was able to change some of its fixed costs and is now under short term conditions. B-Ads and More was able to change its variable costs and is now under short term conditions. C-Ads and More was able to change some of its variable cost and is now under long term conditions. D-Ads and More was able to change some of its fixed costs and is now under long term conditions.

D-Ads and More was able to change some of its fixed costs and is now under long term conditions.

The production function describes how A-GamesVirtual looks for new technologies to upgrade their product. B-GamesVirtual negotiates contracts with their manufacturing employees. C-GamesVirtual promotes their products at various conferences. D-GamesVirtual uses computers, servers, programmers, graphic designers and other inputs to produce video games.

D-GamesVirtual uses computers, servers, programmers, graphic designers and other inputs to produce video games.

If there are substantial economies of scale in a market, that market is likely to include ________. A-many small firms B-many firms of various sizes C-one small firm D-a few large firms

D-a few large firms

Which of the following is an example of a long-run fixed cost? A-hourly wage costs. B-mortgage payments. C-payments for production inputs. D-none of these are examples; there are no fixed costs in the long run

D-none of these are examples; there are no fixed costs in the long run

Total product of labor refers to A-the quantity of additional output produced when the firm adds additional workers to the production process. B-the quantity of output produced from a given amount of capital, holding other inputs constant. C-the cost of producing a given quantity of output. D-the quantity of output produced from a given amount of labor, holding other inputs constant.

D-the quantity of output produced from a given amount of labor, holding other inputs constant.

As the Corner Coffee Shop becomes more popular and sells more coffee, which of the following is more likely to increase? A-fixed cost B-average fixed cost C-Internet subscription D-variable cost

D-variable cost

When the total product curve reaches its maximum point, the value of the marginal product at that point is ________. Responses decreasing increasing zero

Zero

Consider ADs and More, an advertising agency. Which of the following would be more likely to be a variable cost? insurance premiums brochures for customers office rent

brochures for customers

The term ________ describes a situation where as the quantity of output rises, but the long run average cost of production falls. marginal cost output economies of scale diseconomies of scale diminishing marginal returns

economies of scale

Which of the following illustrates a fixed cost? wages paid to a temporary worker insurance payments website design costs raw material expenses

insurance payments

To reduce the effects of diminishing returns, in the long run firms can reduce fixed cost. cut cost. invest in more capital.

invest in more capital.

When all inputs of production can be modified by a firm, then this firm is operating in the present; inputs can always be modified. short-term. long-term.

long-term.

The cost information in the table below shows that variable cost increases at the same rate. average total cost always rise. marginal cost eventually increases.

marginal cost eventually increases.

The term "technology," when used in economics, means specific processes used to produce a product. equipment used to produce a product. labor used to produce a product.

specific processes used to produce a product.