Exam 11: Behind the Supply Curve: Inputs and Costs

Oscar has negotiated a lease for his sporting goods store in which he is required to pay $2,500 per month in rent.Oscar pays his staff $9 per hour to sell sporting goods and his monthly electricity bill averages $700, depending on his total hours of operation.Oscar's fixed costs of production equal:

A curve that shows the quantities of output that can be obtained from different quantities of a variable input, assuming other inputs are fixed, is called the curve.

The curve continually declines as more output is produced in the short run.

Tankao makes Bluetooth sets for mobile devices.When 50 Bluetooth sets are produced, the average variable cost is $30.Tankao's:

(Table: Costs of Producing Bagels) Look at the table Cost of Producing Bagels.The average total cost of producing six bagels is:

If marginal cost is equal to average total cost, then:

If an increase in output results in a decrease in average total cost, the corresponding marginal cost is:

You run a business producing picture frames.This month your total cost of production is $10,000, your variable cost of production is $6,000, and you produce 3,000 picture frames.It follows that:

Figure: The Total Product (Figure: The Total Product) Look at the figure The Total Product.As labor is hired between L1 and L2, the ________ is ________ and the ________ is _.

When marginal cost is below average variable cost, average variable cost must be:

Suppose the marginal cost curve in the short run first decreases, then reaches a minimum, and then increases.If we are at an output where marginal cost is increasing, then:

(Table: Bonnie's Production Function for Good Z) Look at the table Bonnie's Production Function for good Z.Diminishing returns to labor occurs when Bonnie hires the worker.

The total cost curve gets steeper as output increases because of

The slope of a long-run average total cost curve exhibiting decreasing returns to scale is:

Figure: Short-Run Costs (Figure: Short-Run Costs) Look at the figure Short-Run Costs.A is the cost curve.

Krista operates a dry-cleaning business in Tampa that incurs $900 per month in fixed costs.Last month her total output equaled 3,000 pounds of clothes.This month her total output fell to 2,700 pounds.This means her average fixed cost ________ by a little more than _.

Average total cost is:

The advantage of specialization in production is one of the primary reasons for decreasing returns to scale.True

Suppose that the first four workers generate corresponding total outputs of baby diapers of 200, 350, 450, and 500, respectively.The marginal product of the second worker is:

Figure: Short-Run Costs II (Figure: Short-Run Costs II) Look at the figure Short-Run Costs II.Curve 2 is the cost curve.