Exam 12: Production and Cost Analysis II

The reason for the merger of two businesses that sell unrelated goods but can share business practices and sales forces might best be explained by:

Refer to the graph shown. The cost of 5 units of labor and 6 2/3 units of machines is the same as the cost of:

An isocost line is a line that represents combinations of:

When the number of mega-producers of hobs that operated at a lower average cost than smaller producers rose, the number of hogs slaughtered rose to record levels. What economic concept does this describe?

ABC Co. produces only gadgets, and XYZ Co. produces both gadgets and widgets. If ABC Co. produces gadgets at the same average total cost as XYZ Co., economies of:

Refer to the graph shown. If the firm wants to produce 900 units of output, it should use the plant size represented by:

Suppose the average total cost of producing semiconductors in a factory of a particular size declines over time as more semiconductors are produced. This drop in average total cost might best be explained by:

At the planned output level, short-run average total cost equals long-run average total cost, but at all other points, short-run average total cost is higher than long-run average total cost.

A firm can use 5 workers and 10 machines, 7 workers and 9 machines, or 8 workers and 9 machines to produce four cars. If each worker costs $200 and each machine is rented for $50, the economically efficient input combination is:

An entrepreneur most likely would develop a product if expected average total cost is:

Refer to the graph shown. If a firm wants to produce 300 units of output, it should use the plant size represented by:

Refer to the graph shown. The cheapest way to produce 1,000 units of output is with:

Refer to the graph shown. The output range in region c is associated with:

Refer to the graph shown. The graph exhibits economies of scale:

A firm's average cost increases as it increases its output by expanding its plant and hiring additional workers (its only inputs to production). The firm's owner blames the increase in per-unit costs on the law of diminishing marginal productivity. The owner's reasoning is:

When per-unit costs increase as output increases, there are economies of scale in production.

Globalization has made economies of scope:

Economies of scale do not exist in the presence of indivisible setup costs.

Economies of scope exist when the production of one good is less costly because other related goods already are being produced.

Refer to the graph shown. The shift from SATC₁ to SATC₂ reflects: