Exam 11: Output and Costs

Minneapolis business Rogue Chocolatier sells specialty chocolate bars with a high cocoa content. If Rogue's average total cost decreases as the business increases plant size, then Rogue experiences

A company could produce 100 units of a good for $320 or produce 101 units of the same good for $324. The $4 difference in costs is

-At point e in the above figure, the marginal product of labor

Which of the following statements is CORRECT?

When the marginal product curve is downward sloping, the average product curve

-The above table shows the total product schedule for the campus book store. If each employee is paid $12 per hour, what is the average variable cost of selling 83 books per hour (assuming labor costs are the only variable costs of production)?

Total product is

Pizza Hut -Using the data in the above table, what is the average product of three employees?

-The table above gives production information for Bob's Baseball Cap Company. Bob's total cost when zero caps are produced is $200 and workers cost $10 per hour. The marginal cost per hat of producing 30 hats per hour (instead of 25) is

Explain the difference between increasing marginal returns and economies of scale.

With a technological change that increases productivity, the average product curve ________ and the marginal product curve ________.

-Using the data in the above table, the average fixed cost of producing 16 units is

The average total cost curve

-The table above gives a firm's total product schedule. Suppose labor is the only variable factor of production. The price of labor is $500 per week and total fixed costs are $600 per week. If 95 units are produced, the average total cost is

-In the figure above, the marginal product of the second worker is

"Marginal cost is the increase in total cost that results from a one-unit increase in a variable input." True or false? Explain.

What is the relationship between the marginal product of labor and the marginal cost?

-The average total cost curves for Plant 1, ATC₀, and Plant 2, ATC₁, are shown in the figure above. Over what range of output is it efficient to operate Plant 2?

-Jones Production started business with a small scale plant. Fortunately for Smith, the owner of Jones Production, the business grew rapidly. It doubled its plant scale and its labor force every year for the next six years. The table above gives the total costs and the associated total products for each year. a) Complete the table by finding the average cost for each scale. b) Over what range of total product (output) did Jones Production experience economies of scale, constant returns to scale, and diseconomies of scale?

-Based on the above figure, for which of the following amounts of output at Ike's Ice Cream Kitchen does the average product of labor exceed the marginal product of labor?