Exam 11: Production and Cost Analysis I

A business owner makes 50 items by hand in six hours. She could have earned $10 an hour working for someone else. If each item sells for $5 and the explicit costs total $14, accounting profit for 50 items is:

The marginal cost curve:

Economic profit is:

The increase in output obtained by hiring an additional worker is known as:

When the average variable cost curve is at its minimum point, average product will be:

What are the formulas for the following cost concepts: average total cost,average fixed cost,average variable cost and marginal cost? Explain why the ATC and AVC curves get closer together as output increases.

A firm is producing 100 units of output at a total cost of $400. The firm's average variable cost is $3 per unit. What is the firm's total fixed cost?

What are the formulas for the following cost concepts: average total cost,average fixed cost,average variable cost,and marginal cost?

Refer to the graph shown. Total cost of producing Q* is represented by:

The law of diminishing marginal productivity implies that identical increases in all inputs eventually will result in smaller incremental increases in total output.

The marginal cost curve intersects the average fixed cost curve at the minimum point of the average fixed cost curve.

Define each of the following cost concepts: fixed costs,variable costs,and total cost and give examples of each.Do they exist in both the short run and the long run?

The following graph shows average fixed costs, average variable costs, average total costs, and marginal costs of production. The average variable cost curve is represented by which curve?

Refer to the table shown. Marginal product declines when which worker is hired? Number of workers Marginal product of workers 1 2 2 5 3 9 4 14 5 16 6 17 7 18 8 18 9 17 10 15

(a)Draw a graph of a typical production function.Your curve should have the proper shape for a production function that has an increasing marginal productivity range,a diminishing marginal productivity range,and a diminishing absolute productivity range.Indicate with dashed vertical lines the level of variable input (labor)at which the transition is made from increasing to diminishing marginal productivity,and the level of variable input (labor)at which the transition is made from diminishing marginal productivity to diminishing absolute productivity. (b)Directly beneath your production function diagram,draw a diagram with average product and marginal product curves.The horizontal axis of this diagram should be aligned with and use the same scale as the horizontal axis of your production function diagram.Use the reference lines (dashed lines)you drew on your production function graph to properly locate the appropriate points on your marginal product curve.

Refer to the table shown. If seven workers are employed, total output equals: Number of workers Marginal product of workers 1 5 2 7 3 8 4 10 5 11 6 7 7 5 8 3 9 0 10 -1

Imagine that you are currently a college student working at a part time job.You work 15 hours per week as a taco specialist at TACOS! TACOS! TACOS! and earn $8 per hour.One day you realize you're tired of smelling like refried beans all the time and begin thinking about starting your own business.After doing some investigation you decide to spend 15 hours per week running a photocopy service in your dorm.You have determined the following as likely projected expenses and revenues for your first four weeks: Revenue: $800 (8,000 copies sold at $.10 per copy) Costs: $400 for photocopy machine rental,$80 for paper (8,000 pages at $.01 per page) Using this information you decide to start the business.Did you make a wise decision?

When labor is the variable input, the average product equals the:

Total output per worker is also called:

Marginal product eventually: