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Exam 12: The Costs of Production

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Question 71

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A bracelet making company has three employees,and together they produce 10 bracelets an hour.When a fourth worker joins them,the output for the company is now 11 bracelets an hour.Which of the following is true?

A) Diminishing marginal product has set in.
B) Marginal product is rising.
C) Total product is increasing.
D) None of these is true.

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

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Question 72

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Average fixed costs:

A) always trend downward as output increases.
B) always trend upward as output increases.
C) are a constant,regardless of quantity of output.
D) are a vertical line.

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

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Question 73

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The marginal cost curve:

Economists consider:

Tina withdraws $20,000 from her money market account to start up her own house cleaning business.The account earns 3 percent interest.In order to properly account for all costs of her business,Tina must not forget:

Imagine Tom's annual salary as an assistant store manager is $30,000,he owns a building that rents for $10,000 yearly,and his financial assets generate $1,000 per year in interest.One day,after deciding to be his own boss,he quits his job,evicts his tenants,and uses his financial assets to establish a bicycle repair shop.To run the business,he outlays $15,000 in cash to cover all the costs involved with running the business,and earns revenues of $50,000.Has Tom made the best decision?

When accounting profits are positive,economic profits could be:

A college student is thinking about running an ice-cream truck over the summer.Which of the following would likely be a one-time expense of the business?

Explicit costs are costs that:

Total costs:

When accounting profits are negative,economic profits could be:

A production function represents:

Explicit costs include:

Suppose Winston's annual salary as an accountant is $60,000,and his financial assets generate $4,000 per year in interest.One day,after deciding to be his own boss,he quits his job and uses his financial assets to establish a consulting business,which he runs out of his home.To run the business,he outlays $8,000 in cash to cover all the costs involved with running the business,and earns revenues of $150,000.What are Winston's implicit costs?

Suppose Winston's annual salary as an accountant is $60,000,and his financial assets generate $4,000 per year in interest.One day,after deciding to be his own boss,he quits his job and uses his financial assets to establish a consulting business,which he runs out of his home.To run the business,he outlays $8,000 in cash to cover all the costs involved with running the business,and earns revenues of $150,000.What are Winston's accounting profits?

If a firm stops production,then its:

Suppose Sam's Shoe Co.makes only one kind of shoe,which sells for $50 a pair.If they sold 500,000 pairs of shoes,then their total revenue would be:

Average variable costs:

Suppose Sam's Shoe Co.makes only one kind of shoe,which sells for $50 a pair.If they sold 500,000 pairs of shoes,and had a total cost of $1,000,000,what was the company's profit?

If a firm decreases production,then its: