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Exam 13: The Costs of Production

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Question 51

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Accounting profit is equal to

A) marginal revenue minus marginal cost.
B) total revenue minus the explicit cost of producing goods and services.
C) total revenue minus the opportunity cost of producing goods and services.
D) average revenue minus the average cost of producing the last unit of a good or service.

E) None of the above
F) C) and D)

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Question 52

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Table 13-8 -Refer to Table 13-8.What is the average total cost of producing 2 gigaplots at Jimmy's Gigaplot factory?

A) $14.00
B) $18.50
C) $22.50
D) $26.50

E) A) and C)
F) B) and C)

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Question 53

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Figure 13-6 The curves below reflect information about the cost structure of a firm. -Refer to Figure 13-6.Which of the curves is most likely to represent average variable cost?

When the marginal product of an input declines as the quantity of that input increases,the production function exhibits

Scenario 13-3 Tony is a wheat farmer, but he also spends part of his day teaching guitar lessons. Due to the popularity of his local country western band, Farmer Tony has more students requesting lessons than he has time for if he is to also maintain his farming business. Farmer Tony charges $25 an hour for his guitar lessons. One spring day, he spends 10 hours in his fields planting $130 worth of seeds on his farm. He expects that the seeds he planted will yield $300 worth of wheat. -Refer to Scenario 13-3.Tony's economic profit equals

Scenario 13-5 A certain firm produces and sells staplers. Last year, it produced 7,000 staplers and sold each stapler for $6. In producing the 7,000 staplers, it incurred variable costs of $28,000 and a total cost of $45,000. -Refer to Scenario 13-5.In producing the 7,000 staplers,the firm's average total cost was

Table 13-3 -Refer to Table 13-3.Each worker at Gallo's cork factory costs $12 per hour.The cost of each machine is $20 per day regardless of the number of corks produced.Assume the number of machines does not change.If Gallo's produces at a rate of 78 corks per hour,what is the total machine cost per day?

For a firm,the relationship between the quantity of inputs and quantity of output is called the

When marginal cost is greater than average cost,average cost is

In the long run,a firm that produces and sells computers gets to choose

John has decided to start his own lawn-mowing business.To purchase the mowers and the trailer to transport the mowers,John withdrew $1,000 from his savings account,which was earning 3% interest,and borrowed an additional $2,000 from the bank at an interest rate of 7%.What is John's annual opportunity cost of the financial capital that has been invested in the business?

Figure 13-7 -Refer to Figure 13-7.Which of the figures represents the marginal cost curve for a firm?

The use of specialization to achieve economies of scale is one reason modern societies are as prosperous as they are.

If Franco's Pizza Parlor knows that the marginal cost of the 500ᵗʰ pizza is $3.50 and that the average total cost of making 499 pizzas is $3.30,then

Which of the following costs do not vary with the amount of output a firm produces?

Scenario 13-4 Suppose that a given firm experiences decreasing marginal product of labor with the addition of each worker regardless of the current output level. -Refer to Scenario 13-4.Marginal cost will be

Whenever marginal cost is greater than average total cost,

Let L represent the number of workers hired by a firm and let Q represent that firm's quantity of output.Assume two points on the firm's production function are (L = 12,Q = 122) and (L = 13,Q = 132) .Then the marginal product of the 13th worker is

Average total cost reveals how much total cost will change as the firm alters its level of production.

Fixed costs can be defined as costs that