econ chapter 11

A firm has successfully adopted a positive technological change when

it can produce more output using the same inputs.

Which of the following is an implicit cost of​ production?

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rent that could have been earned on a building owned and used by the firm.

If four workers can produce 18 chairs a day and five can produce 20 chairs a​ day, the marginal product of the fifth worker is

2

If a producer is not able to expand its plant capacity​ immediately, it is

operating in the short run.

Refer to the table to the right which shows cost data for Lotus​ Lanterns, a producer of whimsical night lights.

What is the total variable cost of production when the firm produces 115​ lanterns?

$1,557

Average fixed costs of production

falls as long as output is increased.

Long run costs are

Uminus−shaped

because

of economies and diseconomies of scale.

Which of the following statements is

false​?

Marginal cost will equal average total cost when marginal cost is at its lowest point.

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If average total cost is​ $50 and average fixed cost is​ $15 when output is 20​ units, then the​ firm's total variable cost at that level of output is

700

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Golda Rush quit her job as a manager for Home Depot to start her own hair dressing​ salon, Goldilocks. She gave up a salary of​ $40,000 per​ year, invested her savings of​ $30,000 (which was earning 5 percent​ interest) and borrowed​ $10,000 from a close​ friend, agreeing to pay 5 percent interest per year. In her first​ year, Golda spent​ $18,000 to rent a​ salon, hired a​ part-time assistant for​ $12,000 and incurred another​ $15,000 in expenses on equipment and hairdressing material. Based on this​ information, what is the amount of her explicit costs for the first​ year?

​$45,500

The law of diminishing marginal returns

explains why the average total cost and marginal cost curves are

Uminus−shaped

in the short run.

Refer to the diagram to the right. The marginal product of the 3rd worker is

15

Fancy Footwear manufactures shoes. The figure to the right shows Fancy​ Footwear's marginal product of labor and average product of labor curves in the short run.

Which of the following statements correctly describes the curves in the​ figure?

The marginal product of labor curve is represented by curve B and the average product of labor curve is represented by curve

A.

Which of the following equations is​ correct?

AFC​ + AVC​ = ATC

​If, when a firm doubles all its​ inputs, its average cost of production​ decreases, then production displays

economies of scale.

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The long run average cost curve shows

the lowest average cost of producing every level of output in the long run.

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If another worker adds 9 units of output to a group of workers who had an average product of 7​ units, then the average product of labor

will increase.

Economic cost of production differ from accounting costs in that

economic cost adds the opportunity cost of a firm using its own resources while accounting cost does not.

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A characteristic of the long run is

all inputs can be varied.

Vipsana's Gyros House sells gyros. The cost of ingredients​ (pita, meat,​ spices, etc.) to make a gyro is​ $2.00. Vipsana pays her employees​ $60 per day. She also incurs a fixed cost of​ $120 per day. Calculate​ Vipsana's average fixed cost per gyro when she produces 50 gyros using two​ workers?

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​$2.40

The production function shows

the maximum output that can be produced from a set of inputs.

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Which of the following is an example of positive technological​ change?

A​ firm's workers participate in a training program designed to increase the number of surf boards they can produce per day.

Red Stone Creamery currently hires 5 workers. When it added a 6th​ worker, its output actually fell. Which of the following statements is​ true?

The marginal product of the sixth worker must be negative.

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If the marginal cost curve is below the average variable cost​ curve, then

average variable cost is decreasing.

The law of diminishing marginal returns states

that at some​ point, adding more of a variable input to a given amount of a fixed​ input, will cause the marginal product of the variable input to decline.

Implicit costs can be defined as

.

the

nonminus−monetary

opportunity cost of using the​ firm's own resources.

​Vipsana's Gyros House sells gyros. The cost of ingredients​ (pita, meat,​ spices, etc.) to make a gyro is​ $2.00. Vipsana pays her employees​ $60 per day. She also incurs a fixed cost of​ $120 per day. Calculate​ Vipsana's total cost per day when she produces 50 gyros using two​ workers?

​$220

Marginal cost is equal to the

change in total cost divided by the change in output.

Vipsana's Gyros House sells gyros. The cost of ingredients​ (pita, meat,​ spices, etc.) to make a gyro is​ $2.00. Vipsana pays her employees​ $60 per day. She also incurs a fixed cost of​ $120 per day. What is​ Vipsana's total cost per day when she does not produce any gyros and does not hire any​ workers?

120

The marginal product of labor is defined as

the additional output that results when one more worker is​ hired, holding all other resources constant.

Refer to the table to the right which shows cost data for Lotus​ Lanterns, a producer of whimsical night lights.

What is the average total cost of production when the firm produces 120​ lanterns?

Part 2

​$12.3

Which of the following is an example of a​ long-run adjustment?

Walmart builds another Supercenter.

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Golda Rush quit her job as a manager for Home Depot to start her own hair dressing​ salon, Goldilocks. She gave up a salary of​ $40,000 per​ year, invested her savings of​ $30,000 (which was earning 5 percent​ interest) and borrowed​ $10,000 from a close​ friend, agreeing to pay 5 percent interest per year. In her first​ year, Golda spent​ $18,000 to rent a​ salon, hired a​ part-time assistant for​ $12,000 and incurred another​ $15,000 in expenses on equipment and hairdressing material. Based on this​ information, what is the amount of her implicit costs for the first​ year?

​$41,500

The explicit cost of production is also called

accounting cost.

Refer to the diagram to the right. Identify the curves in the diagram.

E ​= marginal cost​ curve;  F ​= average total cost​ curve; G ​= average variable cost​ curve; H​ = average fixed cost curve.