Quiz 5

Oscar has negotiated a lease for his sporting goods store in which he is required to pay $2,000 per month in rent. Oscar pays his staff $10 per hour to sell sporting goods and his monthly electricity bill averages $500, depending on his total hours of operation. Oscar's fixed costs per month equal:

$2,000

For a restaurant:

c. labor and food would be variable resources and a building would be a fixed resource in the short run.

Money spent by a firm to bribe a corrupt foreign minister of commerce, who then is imprisoned, is a(n):

c. sunk cost.

You own a small deli that produces sandwiches, soups, and other items for customers in your town. Which of the following is a fixed input in the production function at your deli?

c. the dining room where customers eat their meals

Oscar has negotiated a lease for his sporting goods store in which he is required to pay $2,500 per month in rent. Oscar pays his staff $9 per hour to sell sporting goods and his monthly electricity bill averages $700, depending on his total hours of operation. Oscar's fixed costs per month equal:

$2,500

Suppose Cyd knows the average cost of producing 7 scones is $10, while the average cost of producing 8 scones is $12. What is the marginal cost of the 8th unit?

$26

Oscar has negotiated a lease for his sporting goods store in which he is required to pay $3,000 per month in rent. Oscar pays his staff $20 per hour to sell sporting goods and his monthly electricity bill averages $600, depending on his total hours of operation. Oscar's fixed costs per month equal:

$3,000

Darren runs a barbershop with fixed costs equal to $50 per day and a total output of 20 haircuts per day. What is his weekly total fixed cost if he is open 6 days per week?

$300

Suppose Cyd knows the average cost of producing 12 scones is $5, while the average cost of producing 13 scones is $7. What is the marginal cost of the 13th unit?

$31

The table shows the cost information for Bonita's pet-sitting service, where the quantity of output is the number of clients served per day. Think about the number you would put in the total cost column, and then answer the question. What is the average total cost of serving 5 clients?

$33

Darren runs a barbershop with fixed costs equal to $80 per day and a total output of 70 haircuts per day. What is his weekly total fixed cost if he is open 6 days per week?

$480

The table shows the cost information for Bonita's pet-sitting service, where quantity of output is the number of clients served per day. Think about the number you would put in the total cost column, and then answer this question. What is the average total cost of serving 2 clients?

$56

Suppose Cyd knows the average cost of producing 9 scones is $5, while the average cost of producing 10 scones is $5.20. What is the marginal cost of the 10th unit?

$7

If Jakob knows the marginal cost of the first sports jersey is $21, the marginal cost of the second sports jersey is $40, and the marginal cost of the third jersey is $17, what is the total variable cost of producing three jerseys?

$78

Suppose you manage a delivery company and you must choose between two transportation methods: (a) truck or (b) train. (a)Trucks: Costs U$ 26,000 upfront. For each mile it runs it costs U$ 2.00 in gas. Maintenance costs U$ 4,000 per year and additional U$ 1.00 per mile run. (b)Train: To lease a container that carries the same volume of orders as the truck it costs U$ 10.000 per year. In addition it costs U$ 4.00 per mile to move orders around. For the truck, the average fixed cost and the marginal cost are the same when:

We run 10000 miles.

Austin's total fixed cost is $4,000. Austin employs 15 workers and pays each worker $100. The average product of labor is 5, and the marginal product of the last worker hired is 8. What is the marginal cost of the last unit produced by the last worker Austin hired?

a. $13

When a cherry orchard in Oregon adds an additional worker, the total cost of production increases by $24,000. Adding the worker increases total cherry output by 600 pounds. Therefore, the marginal cost of the last pound of cherries produced is:

a. $40.

Austin's total fixed cost is $3,600. Austin employs 20 workers and pays each worker $60. The average product of labor is 30, and the marginal product of the twentieth worker is 12. What is the marginal cost of the last unit produced by the last worker Austin hired?

a. $5

At 20 units of output, a firm finds that its average variable cost is $5 per unit and its average total cost is $8 per unit. Therefore, its:

a. average fixed cost is $3 per unit.

Buford Bus Manufacturing installs a new assembly line. As a result, the output produced per worker increases. The marginal cost of output at Buford:

a. will decrease (the MC curve will shift right).

Cindy operates Birds-R-Us, a small store manufacturing and selling 200 bird feeders per month. Cindy's monthly total fixed costs are $700, and her monthly total variable costs are $2,000. If for some reason Cindy's fixed cost increased to $1,000, then her:

average fixed costs would increase.

Maria has a business printing t-shirts selling 200 t-shirts per month. Her monthly total fixed costs are $400, and her monthly total variable costs are $1,000. If for some reason Maria's fixed cost increased to $1,000, then her:

average fixed costs would increase.

At 500 units of output, total cost is $50,000 and total variable cost is $5,000. What does total fixed cost equal at 500 units?

b. $45,000

Wendy leaves her job as a dancer to start her own dance studio. As a dancer, she made $34,000 per year. During the first year she paid $4,300 per year for insurance, $1846 for music and licensing fees, $150 for a boom box, and $11,300 for rent and utilities. She received $60,480 in tuition payments. Wendy's economic profit was

b. $8,884

If Jakob knows the marginal cost of the first sports jersey is $20, the marginal cost of the second sports jersey is $32, and the marginal cost of the third jersey is $40, what is the total variable cost of producing 3 jerseys?

b. $92

If you drop a course after the refund date, the tuition that you have paid and cannot recover is:

b. a sunk cost.

The average total cost of producing cell phones in a factory is $20 at the current output level of 100 units per week. If fixed cost is $1,200 per week:

b. average variable cost is $8.

Cindy operates Birds-R-Us, a small store manufacturing and selling 200 bird feeders per month. Cindy's monthly total fixed costs are $800, and her monthly total variable costs are $1,500. If for some reason Cindy's variable cost decreased to $1,000, then her:

b. average variable costs would decrease.

Cindy operates Birds-R-Us, a small store manufacturing and selling 100 bird feeders per month. Cindy's monthly total fixed costs are $500, and her monthly total variable costs are $1,000. If for some reason Cindy's variable cost increased to $4,000, then her:

b. marginal costs would increase.

King's Inc. produces 250 sweaters per week. The average variable cost per sweater is $3.75 and average fixed costs are $1.50 per sweater. Total cost per week is:

c. $1312.50.

The table shows the cost information for Bonita's pet-sitting service, where quantity of output is the number of clients served per day. Think about the number you would put in the total cost column, and then answer this question. What is the marginal cost of increasing output from 2 clients to 3 clients?

c. $15

Darren runs a barbershop with average fixed costs equal to $60 per day and a total output of 50 haircuts per day. What is his weekly total fixed cost if he is open six days per week?

c. $18,000

Darren runs a barbershop with fixed costs equal to $40 per day and a total output of 10 haircuts per day. What is his weekly total fixed cost if he is open 6 days per week?

c. $240

The table shows the cost information for Bonita's pet-sitting service, where quantity of output is the number of clients served per day. Think about the number you would put in the total cost column, and then answer this question. What is the marginal cost of increasing output from 5 clients to 6 clients?

c. $25

Austin's total fixed cost is $3,600. Austin employs 20 workers and pays each worker $60. If labor is his only variable cost, what is Austin's total cost?

c. $4,800

Jen-Chi's Tea House produces 500 4-ounce packets of tea per week. His variable cost is $14.10 per packet and his total fixed cost per week is $1,775. Jen-Chi's total cost per week is

c. 8,825

Arlene makes earrings in the shape of the mascot of a local university. Last year Arlene made 250 pairs of earrings, which she sold to the university bookstore for $10 each. Arlene works out of her home, so her only cost is $3 per pair for materials and $85 for tax help. If Arlene didn't produce earrings, she would spend her time babysitting her nephews and make about $500 per year.

c. Arlene's total revenue is $2500.

Larry owns his own auto repair shop, and employs three mechanics. His total parts and sales volume this year was $322,400. Because he is well known for his repair expertise, he is also paid $5,200 per year by a local radio station to answer auto repair questions on "Ask the Mechanic." His explicit costs for payroll, parts and taxes, mortgage and utilities are 290,160. Larry left a job as an accountant making $40,000 a year to own his own business. Larry's economic profit is

c. Larry is actually making an economic loss of $2,560.

Krista operates a dry-cleaning business in Tampa that incurs $900 per month in fixed costs. Last month her total output equaled 3,000 pounds of clothes. This month her total output fell to 2,700 pounds. This means her average fixed cost ________ by a little more than ________.

c. increased; 3.33 cents

When Aishe's Bar-B-Que produces 10 pork sandwiches, the total cost is $5.00. When 11 pork sandwiches are produced, the total cost rises to $6.00. From this we know that the marginal cost of the eleventh pork sandwich:

c. is greater than the average cost of 11 pork sandwiches.

The table shows the cost information for Bonita's pet-sitting service, where quantity of output is the number of clients served per day. Think about the number you would put in the total cost column, and then answer this question. What is the marginal cost of increasing output from 1 client to 2 clients?

d. $10

Austin's total fixed cost is $4,000. Austin employs 20 workers and pays each worker $140. The average product of labor is 8, and the marginal product of the last worker hired is 10. What is the marginal cost of the last unit produced by the last worker Austin hired?

d. $14

Oscar has negotiated a lease for his sporting goods store in which he is required to pay $2,500 per month in rent. Oscar pays his staff $9 per hour to sell sporting goods and his monthly electricity bill averages $700, depending on his total hours of operation. Oscar's fixed costs of production equal:

d. $2,500 per month.

Austin's total fixed cost is $4,000. Austin employs 25 workers and pays each worker $110. The average product of labor is 4, and the marginal product of the last worker hired is 5. What is the marginal cost of the last unit produced by the last worker Austin hired?

d. $22

Kaile Cakes is currently producing 10 cakes per day. The marginal cost of the tenth cake is $24, and average total cost of 10 cakes is $6. The average total cost of 9 cakes is:

d. $4.

At 500 units of output, total cost is $50,000 and total variable cost is $5,000. What does average fixed costs equal at 500 units?

d. $90

To pursue a goal of being a business owner, Mary left a job that paid $40,000 per year. At the end of her first year in business, her cash revenues summed up to $90,000 and her explicit costs were $50,000. Also, in order to fund her business startup, Mary cashed in a $20,000 certificate of deposit that was providing a yield of 5%. Ceteris paribus, Mary's economic profit is:

d. -$1,000.

If Jakob knows the marginal cost of producing the seventh sports jersey is $21, then the total cost of seven sports jerseys is:

d. The answer cannot be determined from the information provided.

Cindy operates Birds-R-Us, a small store manufacturing and selling 100 bird feeders per month. Cindy's monthly total fixed costs are $500, and her monthly total variable costs are $2,500. If for some reason Cindy's fixed cost fell to $400, then her:

d. average total costs would decrease.

You run a business producing picture frames. This month your total cost of production is $10,000, your variable cost of production is $6,000, and you produce 3,000 picture frames. It follows that:

d. average variable cost is $2.

You own a small deli that produces sandwiches, soups, and other items for customers in your town. Which of the following is a variable input in the production function at your deli?

d. employees hired to help make the food

Suppose a fast-food restaurant currently serves lunch and dinner, and is trying to determine if it should open for breakfast. Which of the following costs is a sunk cost for this business?

d. monthly rent

For Heidi, the marginal cost of producing one additional photograph equals the change in ________ divided by the change in the ________.

d. total cost; number of photographs