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Exam 13: The Costs of Production

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Question 91

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Jamar used to work as an office manager, earning $40,000 per year. He gave up that job to start a life-coaching business. In calculating the economic profit of his life-coaching business, the $40,000 income that he gave up is counted as part of the life-coaching business's

A) total revenue.
B) opportunity costs.
C) explicit costs.
D) marginal costs.

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

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Question 92

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What effect, if any, does diminishing marginal product have on the shape of the marginal cost curve?

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Diminishing marginal...

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Question 93

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Which is greater -- economic profit or accounting profit?

Table 13-3 -Refer to Table 13-3. The marginal product of the fourth worker is

Scenario 13-6 Ziva is an organic lettuce farmer, but she also spends part of her day as a professional organizing consultant. As a consultant, Ziva helps people organize their houses. Due to the popularity of her home-organization services, Farmer Ziva has more clients requesting her services than she has time to help if she maintains her farming business. Farmer Ziva charges $25 an hour for her home-organization services. One spring day, Ziva spends 10 hours in her fields planting $130 worth of seeds on her farm. She expects that the seeds she planted will yield $300 worth of lettuce. -Refer to Scenario 13-6. An economist would calculate Ziva's total cost of farming to equal

At low levels of production, the firm

Suppose that for a particular business there are no implicit costs. Then

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

Scenario 13-1 Korie wants to start her own business making custom furniture. She can purchase a factory that costs $400,000. Korie currently has $500,000 in the bank earning 3 percent interest per year. -Refer to Scenario 13-1. Suppose Korie purchases the factory using $200,000 of her own money and $200,000 borrowed from a bank at an interest rate of 6 percent. What is Korie's annual opportunity cost of purchasing the factory?

In the short run, a firm that produces and sells house paint can adjust

Figure 13-3 -Refer to Figure 13-3. Which of the following is true of the production function (not pictured) that underlies this total cost function?

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 = 5, Q = 125) and (L = 6, Q = 152) . Then the marginal product of the 6th worker is

Which of the following statements is correct?

A dairy produces and sells organic milk. Last year it sold 500,000 gallons of milk at a price of $7 per gallon. For last year, the firm's

What might cause economies of scale?

Table 13-2 -Refer to Table 13-2. What is the marginal product of the first worker?

Table 13-20 Listed in the table are the long-run total costs for three different firms. -Refer to Table 13-20. Firm C is experiencing economies of scale.

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

Economists and accountants usually disagree on the inclusion of implicit costs into the cost analysis of a firm.

Table 13-19 -Refer to Table 13-19. What is the shape of this firm's total­cost curve?