Exam 11: Production and Cost Analysis I

The average total cost of producing electronic calculators in a factory is $20 at the current output level of 100 units per week. If fixed cost is $1,000 per week:

The following graph shows average fixed costs, average variable costs, average total costs, and marginal costs of production. The distance EF represents:

Variable costs:

Accounting profit and economic profit differ because economic profit does not take into account opportunity cost.

Refer to the table shown. If the output of bicycles is 4 per week, the marginal cost of producing another bicycle per week is: Output (bicycles per week) Tatal cast (dallars) 1 100 2 200 3 310 4 440 5 580 6 730 7 900 8 1,200

Why do most firms operate at output levels where there is diminishing marginal productivity?

Fixed costs exist only in the:

Refer to the table shown. At what level of employment is the marginal product of labor 7? Number of workers Total output 1 4 2 10 3 18 4 28 5 35 6 41 7 45 8 48 9 50 10 49

If a firm shuts down for a week, during that week its:

What is the law of diminishing marginal productivity? Why does it apply only to the short-run?

How does accounting profit differ from economic profit? Explain why accounting profit is more useful for paying your taxes while economic profit is more useful for deciding whether you should continue to stay in business.Give an example of an implicit cost and an example of implicit revenue.

If fixed costs are $960, variable costs are $1,440, and output is 12, then average total cost equals:

Fixed costs remain the same regardless of the level of production.

Refer to the table shown. The marginal product of the sixth worker is: Number of workers Total output 1 4 2 10 3 18 4 28 5 35 6 41 7 45 8 48 9 50 10 49

The only variable input used in producing bicycles in a small factory is labor. Currently four workers are employed; each works 40 hours per week and is paid $10 per hour. If fixed cost is $2,000 per week and total output is 10 bicycles per week, average cost is:

Which of the following cost curves is most often drawn with a U shape?

The minimum point of the average variable cost curve is reached at the output level where:

If the law of diminishing marginal productivity holds true, both average total cost and marginal cost must diminish as output increases.

The marginal cost curve intersects the average total cost curve when average variable costs are:

Which of the following is an example of a short-run decision?