Exam 8: Cost Theory and Estimation

Use the following to answer questions below: -Refer to the graph of the short-run total cost and total variable cost curves. At what level of output is marginal cost equal to average total cost?

A firm that has total fixed costs of $40,000 sells its output for $250 per unit and has an average variable cost of $150. If the firm's cost and revenue curves are linear, how much output must the firm produce to break even?

A firm that has total fixed costs of $20,000 sells its output for $150 per unit and has an average variable cost of $200. If the firm's cost and revenue curves are linear, how much output must the firm produce to break even?

The value of the inputs owned and used by the firm in its own production activity is known as

Triangle Manufacturing has fixed costs of $2,000 per week. The firm manufactures tricycle kits. The kits have a short-run average variable cost of $25 and are sold for $35 each. (i)What is the breakeven level of weekly output for the firm? (ii)What is the degree of operating leverage when weekly output is Q = 250?

If a linear short-run variable cost function is estimated using cross-sectional data, then the corresponding marginal cost function will be

Short-run average variable cost is equal to

Fairview Construction, Inc., has the following short-run total cost schedule: Q 0 1 2 3 4 5 6 7 8 9 10 TC 50 58 62 64 65 67 71 78 88 102 121 (i)What is the firm's average fixed cost when Q = 5? (ii)What is the firm's average variable cost when Q = 7? (iii)What is the firm's average total cost when Q = 8? (iv) What is the firm's marginal cost when Q = 9? (v) At what level of output does the firm begin to experience diminishing returns?

Use the following to answer questions below: -Refer to the graph of the short-run total cost and total variable cost curves. At what level of output is marginal cost equal to average variable cost?

The Japanese cost-management system involves

Which of the following has contributed most to the emergence and growth of logistics?

The survival technique is used to estimate short-run total variable cost functions.

If a firm has a downward-sloping long-run average cost curve, then

Use the following to answer questions below: -Refer to the short-run per-unit cost curves graph. Which of the four curves represents average fixed cost?

The actual expenditures of the firm to hire, rent, or purchase the inputs it requires in production is known as

All costs are variable costs in the long run.

The new firm has entered a business and estimates its learning curve to be $A C = 100 Q ^ { - 4 }$ where Q is the cumulative total product. What is the average cost for the 1^st and the 100^th product?

In order to produce the desired quantity, the firm needs to hire 50 employees and rent 10 units of capital. If the wage rate is $100 per employee and the rental rate is $200 per unit, what is the total cost of producing the desired quantity?

Fairweather Construction, Inc., has the following short-run total cost schedule: Q 0 1 2 3 4 5 6 7 8 9 10 TC 100 106 109 110 112 115 119 124 130 137 145 (i)What is the firm's average fixed cost when Q = 5? (ii)What is the firm's average variable cost when Q = 4? (iii)What is the firm's average total cost when Q = 4? (iv) What is the firm's marginal cost when Q = 10? (v) At what level of output does the firm begin to experience diminishing returns?

A firm manager needs to decide on the optimal level of the firm's output. Given the total variable cost function $T V C = 20 Q - 2 Q ^ { 2 } + Q ^ { 3 }$ , fixed cost , and the price of the product , find the profit maximizing level of output.