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Exam 13: The Costs of Production

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Question 241

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Stick Storage manufactures and sells computer flash drives. Last year it sold 2 million flash drives at a price of $10 each. For last year, the firm's

A) accounting profit was $20 million.
B) economic profit was $20 million.
C) total revenue was $20 million.
D) explicit costs was $20 million.

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Question 242

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Table 13-6 Wooden Chair Factory -Refer to Table 13-6. Assume the Wooden Chair Factory currently employs 2 workers. What is the marginal product of labor when the factory adds a 3rd worker?

A) 5 chairs per hour
B) 10 chairs per hour
C) 20 chairs per hour
D) 25 chairs per hour

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Question 243

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Suppose that a firm's long-run average total costs of producing custom wooden picnic tables is $300 when it produces 10,000 tables and $325 when it produces 11,000 tables. For this range of output, the firm is experiencing

Table 13-7 The Flying Elvis Copter Rides -Refer to Table 13-7. What is the value of Q?

Total cost can be divided into two types of costs:

Table 13-14 -Refer to Table 13-14. What is the average fixed cost of producing 3 units of output?

Since the 1980s, Wal-Mart stores have appeared in almost every community in America. Wal-Mart buys its goods in large quantities and, therefore, at cheaper prices. Wal-Mart also locates its stores where land prices are low, usually outside of the community business district. Many customers shop at Wal-Mart because of low prices. Local retailers, like the neighborhood drug store, often go out of business because they lose customers. This story demonstrates that

The U-shaped average-total-cost curve reflects the U-shaped average-fixed-cost curve.

Table 13-7 The Flying Elvis Copter Rides -Refer to Table 13-7. What is the value of A?

Table 13-16 Listed in the table are the long-run total costs for three different firms. -Refer to Table 13-16. Which firm is experiencing diseconomies of scale?

The shape of the total-cost curve is unrelated to the shape of the production function.

Table 13-19 -Refer to Table 13-19. What is the shape of the average-variable-cost curve?

Economists include both explicit and implicit costs while accountants include only implicit costs. ​

If the marginal cost of producing the tenth unit of output is $3, and if the average total cost of producing the tenth unit of output is $2, then at ten units of output, average total cost is rising.

Constant returns to scale occur when the firm's long-run

Consider a small family wheat farm. List some examples of implicit costs of farming.

Which of the following statements is not correct?

Suppose that a "doggie day care" firm uses only two inputs: hourly workers (labor) and a building (capital) . In the short run, the firm most likely considers

In some cases, specialization allows larger factories to produce goods at a lower average cost than smaller factories.

Scenario 13-3 Kachina is a senior majoring in graphic design at Awesome University (AU) . While she has been attending college, Kachina started a computer consulting business to help senior citizens learn how to use their iPads. Kachina charges $25 per hour for her consulting services. She also works 5 hours a week for the Economics Department to maintain that department's Web page. The Economics Department pays Kachina $20 per hour. -Refer to Scenario 13-3. If Kachina can work additional hours at either job, what is the opportunity cost if she spends one hour reading a novel?