FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 7: The Costs of Production

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 51

Multiple Choice

Review LaterAdd Note

Review Later

What is the total variable cost when output is 100 units in Figure 21.2?

A) $9,600.
B) $296.
C) $200.
D) $20,000.

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

Correct Answer

verified

Show Answer

Question 52

Multiple Choice

Review LaterAdd Note

Review Later

Economies of scale

A) Exist in both the short run and the long run.
B) Explain why average variable and average total costs decline in the short run.
C) Explain why average total costs decline as output increases in the long run.
D) Explain why average total costs increase as output increases in the long run.

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

Correct Answer

verified

Show Answer

Question 53

Multiple Choice

Review LaterAdd Note

Which of the following is always downward-sloping?

When a firm is able to achieve the output indicated by a production function, it is producing with technical efficiency.

In Figure 21.4, a firm that produces between 600 and 800 units per period should choose a plant with a short-run average total cost function of

Complete Table 21.5: $\begin{array}{l}\begin{array} { l ll l l l } Q&TFC&TVC&TC&AVC&MC\\0&\_\_\_\_\_&\_\_\_\_\_&15&--&--\\1&\_\_\_\_\_&\_\_\_\_\_&23&\_\_\_\_\_&\_\_\_\_\_\\2&\_\_\_\_\_&\_\_\_\_\_&\_\_\_\_\_&\_\_\_\_\_&4\\3&\_\_\_\_\_&15&\_\_\_\_\_&\_\_\_\_\_&\_\_\_\_\_\end{array}\end{array}$ $\text { Table } 21.5$ Total fixed costs in Table 21.5 are equal to

$\begin{array}{l}\begin{array} { | c | c | } \hline \begin{array} { c } \text { Output } \\\text { (Units per Day) }\end{array} & \begin{array} { c } \text { Total Cost } \\\text { (Dollars per Day) }\end{array} \\\hline 0 & 16 \\\hline 1 & 30 \\\hline 2 & 42 \\\hline 3 & 58 \\\hline 4 & 78 \\\hline\end{array}\\\text { Table 21.4 }\end{array}$ At 3 units of output in Table 21.4, average fixed costs are

A U-shaped average total cost curve implies

$\begin{array}{l}\begin{array} { | l | r | r | r | r | } \hline \text { Output (units per day) } & 0 & 10 & 20 & 30 \\\hline \text { Total cost (dollars per day) } & \$ 40 & \$ 54 & \$ 62 & \$ 80 \\\hline\end{array}\\\text { Table } 21.2\end{array}$ Above 10 units of output, the average fixed cost in Table 21.2

In Figure 21.2, at what output does this firm maximize technical efficiency?

The law of diminishing returns indicates that the marginal physical product of a variable input declines as more of it is employed, ceteris paribus.

In Figure 21.4, the long-run average total cost curve is given by the curved line segment

Complete Table 21.3 below: $\begin{array}{l}\begin{array} { ccc} \text { Units of } & \text { Units of } \\\text { Labor } & \text { Output } & \text { MPP } \\\hline0 & 0 & ....\\1 & - & 30 \\2 & { 66 } &- \\3 & -& 30\\4 & 116&-\end{array}\\\end{array}$ Table 21.3 What is the unit labor cost in Table 21.3 for the second unit of labor if the MPP represents daily output and the wage rate is $72 per day?

Explain the concepts of explicit costs and implicit costs.Why do economists include implicit costs in their calculation of profits?

Average total cost is equal to

Total output may continue to rise even though marginal physical product is negative.

Average total cost is important to a business because

The vertical distance between a firm's ATC and AVC curves grows smaller as output increases.

The shape of the marginal cost curve reflects the

Explicit costs