Exam 11: Output and Costs

Minneapolis business Rogue Chocolatier sells specialty chocolate bars with a high cocoa content. Rogue can produce 15 chocolate bars per day with one employee, 29 with 2, 35 with 3 and 40 with 4 employees. Which statement is TRUE?

If wages a firm pays it workers increase, then

Cost schedule -Using the data in the above table, the average fixed cost of producing 9 units per day is

When the marginal product of labor is greater than the average product of labor, the

-In the above figure, an unattainable point is

When a firm is experiencing economies of scale

Diminishing marginal returns occur when

-Some of the cost curves for Ike's Ice Cream Kitchen are given in the above figure. At which of the following levels of output will AFC be the lowest?

-The above table shows the short-run total product schedule for the campus book store. Which employee has the highest marginal product (MP)?

-Sandra's Sweaters' production function is shown in the above table. Sandra rents three knitting machines for $30 a day each and hires workers at a wage rate of $40 a day. If Sandra produces 18 sweaters per day, what is her average total cost?

Which of the following statements is TRUE?

-The above table gives some production and cost information for Flaming Fernando's, a restaurant that sells Fiery Frijoles. What is the total fixed cost of producing 4,500 frijoles?

Ernie's Earmuffs produces 200 earmuffs per year at a total cost of $2,000 and $400 of this cost is fixed. What is Ernie's total variable cost?

What is the difference between diminishing marginal returns and diseconomies of scale?

Downsizing is the practice of laying off workers in an attempt to decrease average total cost. Can laying off workers decrease average total cost? Is it possible for the firm to downsize and have its average total cost increase? Explain your answer.

-Silvio's Pizza is a small pizzeria. The firm's production function is shown in the table above. Suppose that Silvio's costs include only the cost of renting ovens, which is $100 per oven per week, the labor cost, $280 per worker per week, and the opportunity cost of Silvio's entrepreneurship, $1,000 per week. When Silvio's uses 2 ovens and hires the 3rd worker, the marginal product of labor is ________ the average product of labor, and therefore the average product of labor ________.

Total variable cost is the sum of all

Cost schedule -In the above table, the average total cost of producing 14 units of output is

-In the above table, diminishing marginal returns start to occur when the

-The above (incomplete) table provides information about the relationships between output and various cost measures. The total fixed cost (TFC) for the firm is