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Exam 13: The Costs of Production

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Question 211

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When a factory is operating in the short run,

A) it cannot alter variable costs.
B) total cost and variable cost are usually the same.
C) average fixed cost rises as output increases.
D) it cannot adjust the quantity of fixed inputs.

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

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Question 212

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Table 13-1 -Refer to Table 13-1. What is total output when 2 workers are hired?

A) 15
B) 45
C) 75
D) 120

E) All of the above
F) None of the above

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Question 213

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Which of the following explains why long-run average cost at first decreases as output increases?

Foregone investment opportunities are an example of

Table 13-19 -Refer to Table 13-19. What is the marginal product of the sixth worker?

In the long run, when marginal cost is above average total cost, the average total cost curve exhibits

Table 13-9 -Refer to Table 13-9. For the firm whose production function and costs are specified in the table, its average-variable-cost curve is

Figure 13-9 The figure below depicts average total cost functions for a firm that produces automobiles. -Refer to Figure 13-9. The firm experiences constant returns to scale at which output levels?

Table 13-18 -Refer to Table 13-18. What is the shape of the average-total-cost curve?

Table 13-13 Teacher's Helper is a small company that has a subcontract to produce instructional materials for disabled children in public school districts. The owner rents several small rooms in an office building in the suburbs for $600 a month and has leased computer equipment that costs $480 a month. -Refer to Table 13-13. How many instructional modules are produced when marginal cost is $1,300?

Which of the following statements about a production function is correct for a firm that uses labor to produce output?

Table 13-8 -Refer to Table 13-8. What is the shape of the marginal cost curve for this firm?

When a firm experiences economies of scale, long-run average total cost falls as the quantity of output increases.

Table 13-19 -Refer to Table 13-19. What is the average total cost of producing 425 units of output?

The marginal-cost curve intersects the average-total-cost curve at the minimum point of the average-total-cost curve.

Scenario 13-8 Wanda owns a lemonade stand. She produces lemonade using five inputs: water, sugar, lemons, paper cups, and labor. Her costs per glass are as follows: $0.01 for water, $0.02 for sugar, $0.03 for lemons, $0.02 for cups, and $0.10 for the opportunity cost of her labor. She can sell 300 glasses for $0.50 each. -Refer to Scenario 13-8. What are Wanda's total economic costs per glass?

Variable cost divided by quantity produced is

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

For a firm, the production function represents the relationship between

Which of the following expressions is correct?