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

Use the information provided in Table 7.1 below to answer the question(s) that follow. Inputs Required to Produce a Product Using Alternative Technologies Technology Units of Capital Number of Employees A 4 18 B 6 12 C 8 8 D 12 6 Table 7.1 -Refer to Table 7.1. If the hourly wage rate is $7 and the hourly price of capital is $10, which production technology should be selected?

Refer to Scenario 7.4 below to answer the question(s) that follow. SCENARIO 7.4: You own and are the only employee of a company that sells custom embroidered pet sweaters. Last year your total revenue was $120,000. Your costs for equipment, rent, and supplies were $30,000. To start this business you invested an amount of your own capital that could pay you a $50,000 a year return. -Refer to Scenario 7.4. A yearly normal return for your company would be

The formula q/L represents

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

Use the information provided in Table 7.2 below to answer the question(s) that follow. Inputs Required to Produce a Product Using Alternative Technologies Technology Units of Capital Number of Employees A 16 8 B 12 12 C 8 20 D 6 24 -Refer to Table 7.2. If the hourly price of capital is $30 and the hourly wage rate is $5, which production technology should be selected?

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

Profit is equal to

Assume the total product of three workers is 120 and the total product of four workers is 160. The average product of four workers is ________, and the marginal product of the fourth worker 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. The slope of the isocost line is

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 CD. If the price of capital is $10, then the price of labor is

Refer to Scenario 7.4 below to answer the question(s) that follow. SCENARIO 7.4: You own and are the only employee of a company that sells custom embroidered pet sweaters. Last year your total revenue was $120,000. Your costs for equipment, rent, and supplies were $30,000. To start this business you invested an amount of your own capital that could pay you a $50,000 a year return. -Refer to Scenario 7.4. During the year your economic costs were

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 slope of isocost CE is

Related to the Economics in Practice on page 154: According to the Economics in Practice feature, productivity of the firms participating in the United States Technical Assistance and Productivity Program

Refer to the information provided in Figure 7.1 below to answer the following question(s). Figure 7.1 -Refer to Figure 7.1. A corn producer's profit is $200 and is producing 100 bushels of corn. Then he must have a cost per bushel of

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

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

You own a building that has four possible uses: a tailor shop, a pharmacy, a sports bar, and an antique mall. The building's value in each use is $4,000; $6,000; $8,000; and $10,000, respectively. You decide to open a sports bar. The opportunity cost of using this building for a sports bar is

The additional output that can be produced by adding one additional unit of a specific input is called marginal product.

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

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