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

Refer to the information provided in Figure 7.1 below to answer the following question(s). Figure 7.1 -Refer to Figure 7.1. This corn producer earns a total revenue of $900. Each bushel of corn is sold for $5. This corn producer must be selling ________ bushels of corn.

Assume the total product of two workers is 200 and the total product of three workers is 300. The three workers' average product is ________ while the third worker's marginal product is ________.

Refer to Scenario 7.6 below to answer the question(s) that follow. SCENARIO 7.6: Upon graduating with an accounting degree, you open your own accounting firm of which you and your assistant are the only employees. To start the firm you passed on a job offer with a large accounting firm that offered you a salary of $50,000 annually. Last year you earned a total revenue of $120,000. Rent and supplies last year were $50,000. Your assistant's salary is $30,000 annually. -Refer to Scenario 7.6. Your annual operating profit is

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. If this firm's cost of capital is $20 per unit and its cost of labor is $10 per unit, the isocost line represents a total cost of

Assume the total product of two workers is 80 and the total product of three workers is 90. The average product of three workers is ________, and the marginal product of the third worker is ________.

For a firm, its economic profit is usually greater than its accounting profit.

The Cakery Bakery sells 200 muffins at a price of $2 per muffin. Its explicit costs for producing 200 muffins are $350. The Cakery Bakeryʹs economic profits are

When Burger Barn hires one worker, 20 customers can be served in an hour. When Burger Barn hires two workers, 50 customers can be served in an hour. The marginal product of the second worker is ________ customers served per hour.

If the marginal product of labor is less than the average product of labor, then the average product of labor is increasing.

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 operating profit is

If Microsoft is earning a rate of return greater than the return necessary for the business to continue operations in the long run, then

The rate of return on capital that is just sufficient to keep owners and investors satisfied is called

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's isocost line would shift from CE to CD if

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. If the price of capital is $30, then along isocost line AB total cost is

One decision that all firms must make is how much output to supply.

The higher the level of output, the farther ________ the isoquant will lie.

The Oh So Humble Bakery sells 300 muffins at a price of $1 per muffin. Its explicit costs for producing 300 muffins are $250. The Oh So Humble Bakery's economic profits are

When the marginal product of labor ________ the average product of labor, then the average product is maximized.

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. At Point C, the absolute value of the slope of q² = 200 is

Refer to Scenario 7.5 below to answer the question(s) that follow. SCENARIO 7.5: You own and are the only employee of a company that customizes bicycles. Last year your total revenue was $60,000. Your costs for rent and supplies were $25,000. To start this business you invested an amount of your own capital that could pay you a $45,000 a year return. -Refer to Scenario 7.5. A yearly normal return for your company is