Exam 7: Producers in the Short Run

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. The firm's marginal product of its variable factor is maximized when it produces units of output.

An example of "real" capital is

Suppose a production function for a firm takes the following algebraic form: Q = 2KL - (0.2)L2, where Q is the output of sweaters per day. Now suppose the firm is operating with 8 units of capital (K=8) and 10 units of labour (L=10). What is the output of sweaters?

When a corporation issues a bond

We can predict that resources will move into an industry whenever

Which of the following factors of production is most likely to be variable in the short run?

Short- run cost curves are eventually upward- sloping because of the effects of

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

Real capital includes

Which of the following statements about the relationship between marginal product and average product is correct?

Suppose a firm producing digital cameras is operating such that marginal costs are higher than average costs. If the firm produces one more camera, average costs will

A firm that has two or more owners who share decision- making power as well as the firm's profits is called

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 $\text { TABLE 7- } 4$ -Refer to Table 7- 4. The average product of labour is highest when the firm hires units of labour.

The table below provides the total revenues and costs for a small landscaping company in a recent year. $\begin{array}{|l|l|}\hline \text { Total Revenues }(\$) & 250,000 \\\hline & \\\hline \text { Total Costs }(\$) & \\\hline \text { - wages and salaries } & 150,000 \\\hline \text { risk- free return of } 2 \% \text { on owner's capital of } \$ 20 & 400 \\000\\\hline \text { interest on bank loan } & 1500 \\\hline \text { cost of supplies } & 27000 \\\hline \text { depreciation of capital equipment } & 8000 \\\hline \text { additional wages the ow ner could have earned } & 30000 \\\text {in next best alternative }\\\hline \text {- risk premium of } 4 \% \text { on owner's capital of } \$ 20&800\\000\\\hline\end{array}$ $\text { TABLE 7- } 2$ -Refer to Table 7- 2. The economic profits for this firm are

Diminishing marginal product of labour is said to exist when there is

It is assumed in standard economic theory that a firm makes decisions in an effort to

The table below provides the annual revenues and costs for a family- owned firm producing catered meals. $\begin{array}{|l|l|}\hline \text { Total Revenues }(\$) & 500,000 \\\hline & \\\hline \text { Total Costs (\$) } & \\\hline \text { wages and salaries } & 200,000 \\\hline \text { risk- free return of } 6 \% \text { on owners' capital of } 250,000 & 15,000 \\\hline \text { rent } & 105,000 \\\hline \text { - depreciation of capital equipment } & 25,000 \\\hline \text { risk premium of } 8 \% \text { on owners' capital of } 250,000 & 20,000 \\\hline \text { - intermediate inputs } & 150,000 \\\hline \text { forgone wages of owners in alternative employment } & 80,000 \\\hline \text { interest on bank loan } & 10,000 \\\hline\end{array}$ $\text { TABLE 7- } 1$ -Refer to Table 7- 1. The explicit costs for this family- owned firm are

With regard to economic decision making for firms, the long run is a period in which

Average, marginal, and total product curves

A family of short- run cost curves shows how