Exam 8: Short-Run Costs and Output Decisions

Refer to the information provided in Figure 8.4 below to answer the question(s) that follow. Figure 8.4 -Refer to Figure 8.4. If six microwave ovens are produced, average variable costs are

A firm is producing output less than the output associated with the minimum point on the firm's short run average variable cost curve. At this level of output the firm uses its fixed capital input ________ and its variable labor input ________.

The marginal revenue curve for a perfectly competitive firm will be upward sloping.

The formula for AVC is

If a profit-maximizing firm is currently producing where MR = MC, it should

Refer to the information provided in Figure 8.4 below to answer the question(s) that follow. Figure 8.4 -Refer to Figure 8.4. If three microwave ovens are produced, average variable costs are

Refer to the information provided in Figure 8.8 below to answer the question(s) that follow. Figure 8.8 -Refer to Figure 8.8. A soybean farmer's ________ level of output is 1,000 units of output.

Homogeneous products are indistinguishable from one another.

A farmer producing bushels of soybeans in the perfectly competitive soybean industry is currently maximizing profits. If the market price of soybeans increases and the farmer adjusts output to the new price, he will produce ________ soybeans and make ________ profit.

Labor is the only variable input for Elliot's dog-walking service. His labor costs are $300 a day and his service walks 25 dogs per day. His labor costs increase to $315.50 a day to walk 26 dogs per day. The marginal cost of walking that 26th dog is

Refer to the short-run information provided in Figure 8.5 below to answer the question(s) that follow. Figure 8.5 -Refer to Figure 8.5. If one drone is produced, total variable costs are

Firms ________ their ________ costs in the short run.

If marginal cost is increasing, then average total cost must be increasing simultaneously.

Refer to the information provided in Figure 8.8 below to answer the question(s) that follow. Figure 8.8 -Refer to Figure 8.8. If the market price of soybeans falls to $8, then to maximize profits this farmer should produce

Perfectly competitive firms maximize their profit by producing the output level where P = MR = AVC.

The decision by firms of how to produce output is based on

Marginal cost is ________ average variable cost when ________.

The average variable cost of producing 250 sundaes is $5. At this level of output, average variable cost is minimized. Which of the following statements is true?

Alicia spends $20,000 on remodeling a storefront that she then opens as a flower shop. Her business has not been very successful, and she needs an additional $8,000 to keep the flower shop. Which of the following is true?

The short-run average variable cost curve eventually begins to increase at an increasing rate because of