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Exam 13: The Costs of Production

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Question 91

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Figure 13-9 -Refer to Figure 13-9.The firm experiences diseconomies of scale if it changes its level of output

A) from Q₁ to Q₂.
B) from Q₂ to Q₃.
C) from Q₃ to Q₄.
D) from Q₄ to Q₅.

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Question 92

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Accountants keep track of the money that flows into and out of firms.

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Question 93

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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 fixed cost?

When calculating a firm's profit,an economist

To an economist,it is conceivable that the objective that motivates an individual entrepreneur to start a business arises from

The minimum points of the average variable cost and average total cost curves occur where

Marginal cost equals

Table 13-3 -Refer to Table 13-3.Assume Gallo's currently employs 2 workers.What is the marginal product of labor when Gallo's adds a 3rd worker?

Economists normally assume that the goal of a firm is to (i) sell as much of their product as possible. (ii) set the price of their product as high as possible. (iii) maximize profit.

Table 13-6 Adrian's Premium Chocolates produces boxes of chocolates for its mail order catalogue business. She rents a small room for $150 a week in the downtown business district that serves as her factory. She can hire workers for $275 a week. There are no implicit costs. -Refer to Table 13-6.Adrian has received an order for 3,000 boxes of chocolates for next week.If she expects that the trend in the marginal product of labor will continue in the same direction,it is most likely that her best decision will be to

According to the mathematical laws that govern the relationship between average total cost and marginal cost,where must these two curves intersect?

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

Diminishing marginal product exists when the production function becomes flatter as inputs increase.

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.What is the total opportunity cost of the day that Farmer Tony incurred for his spring day in the field planting wheat?

Which of the following expressions is correct?

For Firm A,when four units of output are produced,the total cost is $175 and the average variable cost is $33.75.What would the average fixed cost be if ten units were produced?

Figure 13-8 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-8.At levels of output below M the firm experiences

The average total cost when 5 units of output are produced is $30,and the marginal cost of the sixth unit of output is $60.What is the average total cost when six units are produced?

Scenario 13-1 Joe wants to start his own business. The business he wants to start will require that he purchase a factory that costs $400,000. Joe currently has $500,000 in the bank earning 3 percent interest per year. -Refer to Scenario 13-1.If Joe purchases the factory with his own money,what is the annual implicit opportunity cost of purchasing the factory?

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