Exam 7: Producers in the Short Run

The table below provides the total revenues and costs for a small landscaping company in a recent year. $\begin{array} { | l | l | } \hline \text { Total Revenues }(\$) & 250000 \\\hline & \\\hline \text { Total Costs }(\$) & \\\hline \text { wages and salaries } & 150000 \\\hline \text { risk-free return of } 2 \% \text { on owner's capital of } \$ 20000 & 400 \\\hline \text { interest on bank loan } & 1500 \\\hline \text { cost of supplies } & 27000 \\\hline \text { depreciation of capital equipment } & 8000 \\\hline \text { additional wages the owner could have earned in next } & 30000 \\\text { best alternative } & \\\hline \text { risk premium of } 4 \% \text { on owner's capital of } \$ 20000 & 800 \\\hline\end{array}$ TABLE 7- 2 -Refer to Table 7- 2.The implicit costs for this firm are

In the short run time horizon for a firm,total fixed costs

Suppose Jodi's widget business is using two inputs,labour and capital.If the price of labour increases,which of the following will happen?

We can predict that resources will move into an industry whenever

Jodi recently went into business producing widgets.Which of the following would be a fixed cost for her firm? 1.labour costs of $1000 per month 2.raw material costs of $5000 per month 3.a one- year lease on a building of $12 000

The table below shows output,marginal cost,and average variable cost for the production of pairs of shoes.All costs are in dollars. Output Marginal Cost Average Variable Cost 50 60 140 70 45 115 90 35 95 110 30 80 130 35 65 150 60 60 170 105 65 190 180 75 210 230 90 230 290 110 TABLE 7- 6 -Refer to Table 7- 6.If the firm produces 130 pairs of shoes,and the fixed cost is $550,then the firm's total cost is

An example of "real" capital is

Which of the following is most likely a long- run decision for a firm?

A limited partnership differs from an ordinary partnership by

The diagram below shows some short- run cost curves for a firm. FIGURE 7- 2 -Refer to Figure 7- 2.Which of the following choices correctly identifies the cost curves in part (ii)of the figure?

Suppose a production function for a firm takes the following algebraic form: Q = (0.5)KL - 40L,where Q is the output of paintbrushes per week.Now suppose the firm is operating with 100 units of capital (K = 100)and 30 000 units of labour (L = 30 000).What is the output of paintbrushes per week?

The following data show the total output for a firm when specified amounts of labour are combined with a fixed amount of capital.When answering the questions,you are to assume that the wage per unit of labour is $25 and the cost of the capital is $100. Labour per unit of time Total output 0 0 1 25 2 75 3 175 4 250 5 305 TABLE 7- 4 -Refer to Table 7- 4.The average product of labour is highest when the firm hires units of labour.

Consider a firm in the short run.If total product is at its maximum,then

In the short run,the firm's product curves show

Suppose a firm with the usual U- shaped cost curves is producing a level of output such that its short- run costs are as follows: ATC = $0.37 per unit AVC = $0.32 per unit AFC = $0.05 per unit MC = $0.43 per unit Given these short- run costs,as the firm increases its output,which of the following statements is true?

In the short run,the firm's product curves show

The table below provides the annual revenues and costs for a family- owned firm producing catered meals. $\begin{array}{|l|l|}\hline \text { Total Revenues }(\$) & 500000 \\\hline & \\\hline \text { Total Costs }(\$) & \\\hline \text { wages and salaries } & 200000 \\\hline \text { risk- free return of } 6 \% \text { on owners' capital of } 250000 & 15000 \\\hline \text { rent } & 105000 \\\hline \text { depreciation of capital equipment } & 25000 \\\hline \text {-risk premium of } 8 \% \text { on owners' capital of } 250000 & 20000 \\\hline \text { - intermediate inputs } & 150000 \\\hline \text { forgone wages of owners in alternative employment } & 80000 \\\hline \text { - interest on bank loan } & 10000 \\\hline\end{array}$ TABLE 7- 1 -Refer to Table 7- 1.The economic profits for this family- owned firm are

The table below provides the annual revenues and costs for a family- owned firm producing catered meals. $\begin{array}{|l|l|}\hline \text { Total Revenues }(\$) & 500000 \\\hline & \\\hline \text { Total Costs }(\$) & \\\hline \text { wages and salaries } & 200000 \\\hline \text { risk-free return of } 6 \% \text { on owners' capital of } 250000 & 15000 \\\hline \text { rent } & 105000 \\\hline \text { depreciation of capital equipment } & 25000 \\\hline \text { risk premium of } 8 \% \text { on owners' capital of } 250000 & 20000 \\\hline \text { - intermediate inputs } & 150000 \\\hline \text { forgone wages of owners in alternative employment } & 80000 \\\hline \text { - interest on bank loan } & 10000 \\\hline\end{array}$ TABLE 7- 1 -Refer to Table 7- 1.The explicit costs for this family- owned firm are

Consider a basket- producing firm with fixed capital.If the firm can produce 36 baskets per day with 3 workers and then increases production to 44 baskets per day with 4 workers,then which of the following statements is true?

Sport- fishermen on the Campbell River in British Columbia are catching fewer fish and are having to fish many more hours to catch them.However,the total number of fish caught on the river continues to increase.The river is experiencing