Exam 11: Output and Costs

The steeper the slope of the total product curve, the

A firm's average total cost is $100, its average variable cost is $90, and its total fixed cost is $1,000. Its output is

Electric utility companies have built larger and larger electric generating stations and, as a result, the long-run average cost of producing each kilowatt hour decreased. This is an example of

In the long run

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

-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 the rental rate of capital rises to $50 per machine a day, Sandra's ________ curve shifts upward.

Decent Donuts -Using the table above, what is the marginal product of the 5th worker hired at Decent Donuts?

When long-run average cost increases as output increases there are

The average total cost curve is U-shaped. At the quantity of output where average total cost is at its minimum, is the marginal cost curve above the average total cost curve, below the average total cost curve, or intersecting the average total cost curve?

-Ayanna grows herbs. Last year she grew 2,000 pounds of herbs in a year while using 250 square feet of land and 1 worker. This year she doubled her land to 500 square feet, doubled her workers to 2, and grew 4,500 pounds of herbs. She sells her rare, organic herbs for $50 a pound. She pays her workers $25,000 a year and rents her land for $100 per square foot for a year. These are her only costs. a) What was Ayanna's total cost last year and this year? b) What was Ayanna's average total cost last year and this year? c) Did Ayanna experience economies or diseconomies of scale?

-Based on the production data for Pat's Pizza Parlor in the above table, the marginal product of the 4th worker is ________ pizzas.

In the short run, average fixed cost is constant as output increases.

Which of the following shifts the AVC curve upward at Barney's Bagel Bakery?

-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?

Over the range of output for which the average product of labor curve is negatively sloped, the average variable cost curve is positively sloped.

-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. Suppose Silvio's uses Plant 2 and hires 4 workers. What is the firm's average total cost?

Jefferson's Cleaners -Using the data in the above table, which worker at Jefferson's Cleaners has the highest marginal product?

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?

A decrease in the price of a fixed factor of production decreases total cost and

Electric utility companies have built larger and larger electric generating stations and, as a result, the long-run average cost of producing each kilowatt hour decreased. This is an example of