Exam 6: Costs

Joey's Lawncutting Service rents office space from Joey's dad for $300 per month.Joey's dad is thinking of increasing the rent to $400 per month.As a result Joey's marginal cost of cutting grass will

If a firm buys a specialized metal stamping machine that will last 4 years for $125,000 and cannot resell it,the sunk cost is

Suppose the short-run production function is q = 10 ∗ L.If the wage rate is $10 per unit of labor,then AFC equals

The long run average cost curve may initially slope downward due to

If a firm buys a building so as to have office space for its workers,the monthly opportunity cost of the building is best measured as

Suppose that each worker must use only one shovel to dig a trench,and shovels are useless by themselves.In the long run,an increase in the price of shovels will result in

You purchase a pizza oven that is expected to last 10 years for $15,000.How do you account for the economic cost of the oven?

Travel websites such as Travelocity tend to offer reservation services for multiple travel modes.This is because

If the average cost of producing a good is increasing as a firm produces more of the good,then which of the following must be TRUE?

Which of the following is most likely to have declining opportunity costs?

Isoquant lines represent ________ whereas isocost lines represent ________.

Suppose that each worker must use only one shovel to dig a trench,and shovels are useless by themselves.In the long run,the firm will experience

When the isocost line is tangent to the isoquant,then

If a firm buys a specialized metal stamping machine that will last 4 years for $125,000 and cannot resell it,the opportunity cost is

Variable costs are

One problem with measuring a durable good's cost is

Suppose the short-run production function is q = 10 ∗ L.If the wage rate is $10 per unit of labor,then AVC equals

If the Cobb-Douglas production function for a beer manufacturer is q=1.52L⁰.⁶K⁰.⁴.If we assume that the firm's capital is fixed at 250 units and the rental rate of capital is $5 per unit,then average fixed cost is

A firm can minimize cost by

If the Cobb-Douglas production function for a beer manufacturer is q=1.52L⁰.⁶K⁰.⁴.Assume that the firm's capital is fixed at 250 units,the rental rate of capital is $5 per unit,and the wage rate is $10 per hour.The amount of labor needed to produce q units of output is