Exam 8: Short-Run Costs and Output Decisions

Refer to the information provided in Table 8.1 below to answer the question(s) that follow. Table 8.1 Produce Using Techniques Units of Variable K Inputs L 1 unit of output A 8 8 B 4 12 2 units of output A 14 12 B 8 20 3 units of output A 16 12 B 12 22 -Refer to Table 8.1. Assuming the price of labor (L) is $5 per unit and the price of capital (K) is $10 per unit, which of the following statements is true?

Refer to the information provided in Figure 8.6 below to answer the question(s) that follow. Figure 8.6 -Refer to Figure 8.6. Curve 3 is Outdoor Equipment's

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 ________.

If a firm's demand curve is perfectly elastic, then at the profit-maximizing level of output

Short-run costs that depend on the level of output are

Refer to the information provided in Table 8.2 below to answer the question(s) that follow. Table 8.2 $\text {Number of}$ Earrings TVC MC AVC TFC TC AFC ATC 0 100 1 50 2 95 3 46.67 4 300 5 270 -Refer to Table 8.2. If Sherry produces four pairs of earrings, her average fixed costs are

Dana spends $10,000 on remodeling a storefront that she then opens as a shoe store. The business has not been very successful, and she needs an additional $3,000 to keep the shoe store open. Which of the following is true?

Perfectly competitive firms sell homogeneous products.

If a firmʹs demand curve is ________, then at the profit-maximizing level of output P = MR = MC.

It is ________ for a corn producer in a perfectly competitive corn industry to make excess profits because entry into the corn industry is free.

The profit-maximizing level for all firms, regardless of industry structure, is the output level where

Average total cost is minimized at a higher level of output than average variable cost.

Economists usually assume that ________ is a variable input in the ________ run.

Firms have ________ over their ________ costs in the short run.

Which of the following is most likely to be a variable cost for a firm?

Assume Cathy's Cupcake Company operates in a perfectly competitive market producing 10,000 cupcakes per day. At this output level, marginal cost exceeds this firmʹs price. Assuming price exceeds average variable cost, to maximize profits Cathy's should

Refer to the information provided in Table 8.5 below to answer the question(s) that follow. Table 8.5 Number of Swords TVC MC AVC TFC TC AFC ATC 0 50 1 25 2 47.50 3 23.33 4 150 5 135 -Refer to Table 8.5. If Phoebe produces one sword, her total variable costs are

Homogeneous products are indistinguishable from one another.

A perfectly competitive industry consists of firms that produce ________ products.

Refer to the information provided in Table 8.3 below to answer the question(s) that follow. Table 8.3 $\text {Number of}$ Earrings TVC MC AVC TFC TC AFC ATC 0 1 20 2 10 30 3 110 4 20 5 180 -Refer to Table 8.3. The marginal cost of the fourth unit is ________ and the average total cost of four units is ________.