Exam 12: Production and Cost Analysis II

When carmakers began to cut the costs of producing cars by designing the chassis, engines, and transmissions so that different models could be produced on the same assembly line, production costs fell $240 per car. This idea best illustrates:

An entrepreneur is an individual who sees an opportunity to sell an item at a price higher than the average total cost of producing it.

If labor costs $10 per unit and machines rent for $20 apiece, the slope of an isocost line might imply a substitution of:

The standard long-run model assumes that:

The graph shown exhibits constant returns to scale:

At the minimum efficient level of production:

In the long run:

If the demand for flat screen television sets is rising while at the same time the price of a flat screen TV is falling, there is evidence of:

Refer to the graph shown. The marginal rate of substitution at point C is:

Given that there are significant economies of scale involved in making flat screen television sets, the cost of manufacturing a flat screen television set most likely will:

Technical efficiency in production means a given level of output is produced with the minimum amount of inputs.

The long-run average total cost curve is considered to be an envelope curve as each short-run average total cost curve touches it at only one level of output.

An entrepreneur probably will start a business if she sees an opportunity to sell an item at a price:

The merger between two general merchandise stores, Sears and Kmart, each of which carried some specialty items, most likely produced:

The minimum efficient level of production refers to the production level in the long run that spreads setup costs out just enough to make production profitable.

Refer to the graph shown. A firm that produces 900 units of output using the plant size associated with SATC₂ minimizes:

Expected economic profit per unit is equal to:

Refer to the graph shown. If the seller expects a price of $48:

The upward-sloping portion of the long-run average total cost curve is caused by:

A firm can use 50 workers and 10 machines, 70 workers and 9 machines, or 75 workers and 9 machines to produce 40 chairs. If each worker costs $20 and each machine is rented for $500, the economically efficient input combination is: