Exam 7: The Production Process: the Behavior of Profit-Maximizing Firms

Related to the Economics in Practice on page 151: Which of the following would be most likely to make it more efficient for delivery trucks to drive more quickly?

Refer to Scenario 7.1 below to answer the question(s) that follow. SCENARIO 7.1: You are the owner and only employee of a company that writes computer software that is used by gamblers to collect sports data. Last year you earned a total revenue of $90,000. Your costs for equipment, rent, and supplies were $60,000. To start this business you invested an amount of your own capital that could pay you a return of $40,000 a year. -Refer to Scenario 7.1. A yearly normal return for your computer software firm would be

Refer to the information provided in Figure 7.10 below to answer the question(s) that follow. Figure 7.10 -Refer to Figure 7.10. The slope of the isocost line is

What is the formula for the average product of labor?

Refer to the information provided in Figure 7.6 below to answer the question(s) that follow. Figure 7.6 -Refer to Figure 7.6. If the price of capital is $20 and the price of labor is $10, the optimal product technique is

The Wax Works sells 400 candles at a price of $10 per candle. The Wax Works' total costs for producing 400 candles are $500. The Wax Works' economic profit is

Refer to the information provided in Figure 7.7 below to answer the question(s) that follow. Figure 7.7 -Refer to Figure 7.7 above. If Roller Skates Unlimited moves from isoquant A to isoquant B, the number of roller skates produced

Refer to the information provided in Figure 7.10 below to answer the question(s) that follow. Figure 7.10 -Refer to Figure 7.10. The firm's level of total cost is represented by the given isocost line. At the optimal combination of capital and labor, the firm produces ________ units of output.

Refer to the information provided in Figure 7.8 below to answer the question(s) that follow. Figure 7.8 -Refer to Figure 7.8. The firm is currently along isocost CE. If the price of capital is $12, then the price of labor is

You are certain that a normal rate of return is 18% for the computer industry. What do you expect for a normal rate of return in the computer software industry, which is considered to be much riskier than the computer industry?

If the product derived from the last dollar spent on labor is less than the product derived from the last dollar spent on capital, then the firm

At the Pampered Pet Salon the marginal products of the first, second, and third workers are 50, 36, and 25 dogs washed, respectively. The total product (number of dogs washed) of the first two workers is

At the Pampered Pet Salon the marginal products of the first, second, and third workers are 20, 16, and 10 dogs washed, respectively. The total product (number of dogs washed) of the three worker is

In the short run, a firm

Refer to the information provided in Figure 7.8 below to answer the question(s) that follow. Figure 7.8 -Refer to Figure 7.8. The firm is currently along isocost CE. If the price of capital is $24, then the price of labor is

At the Larson Bakery the marginal products of the first, second, and third sales clerks are 30, 27, and 21 customers served, respectively. The total product (number of customers served) of the three sales clerks is

Assume that capital and labor are complementary inputs. If the firm increases the amount of capital it employs, this would

Refer to the information provided in Figure 7.2 below to answer the question(s) that follow. Figure 7.2 -Refer to Figure 7.2. The average product of the first worker is ________ lawns moved.

Refer to the information provided in Figure 7.4 below to answer the question(s) that follow. Figure 7.4 -Refer to Figure 7.4. The average product of two workers is

Refer to Scenario 7.3 below to answer the question(s) that follow. SCENARIO 7.3: Upon graduating with an accounting degree, you open your own accounting firm of which you are the sole employee. To start the firm you passed on a job offer with a large accounting firm that offered you a salary of $60,000 annually. Last year you earned a total revenue of $100,000. Rent and supplies last year were $50,000. -Refer to Scenario 7.3. Your annual economic costs are