Exam 11: Output and Costs

-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

A firm's total cost in the short run is the sum of its fixed cost plus its variable cost plus its marginal cost.

Constant returns to scale means that as all inputs are increased

-The above table shows the total product schedule for the campus book store. If employees are paid $6 per hour, assuming there are no other variable costs, then the average variable cost of selling books will reach its minimum at

As output increases, marginal cost will eventually

A firm increases both its plant and its labor force by the same percentage and its average total costs remain unchanged. Is the firm experiencing increasing returns to scale, constant returns to scale, or decreasing returns to scale?

-In the above figure, the total cost curve is curve

Decent Donuts -Using the table above, for which of the following levels of employment does the average product of labor exceed the marginal product of labor at Decent Donuts?

What is the difference between average total cost and marginal cost and are they ever equal to each other?

-The table above gives costs at Jan's Bike Shop. Unfortunately, Jan's record keeping has been spotty. Each worker is paid $100 a day. Labor costs are the only variable costs of production. What is the total cost of producing 50 bikes?

In the short run

For the past 15 years the American public has wanted to buy big trucks. The Big Three automakers delivered, investing billions in plants that build gas guzzlers. Now, when customers walk into showrooms, gas mileage is on their mind. Retooling the industry will take years, so in the meantime GM, Ford and Chrysler are tweaking their existing models. They're changing tires, adjusting transmissions and exhaust valves in hopes of getting one or maybe two more miles per gallon. Which of the decisions by the Big Three to gain gas mileage is a short run decision?

Explain why average total costs initially decrease and then increase as output increases.

-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 1 and hires 3 workers. What is the firm's average fixed cost?

What do economists mean when they say that a firm's plant is fixed?

-The average total cost curves for Plant 1, ATC₀, and Plant 2, ATC₁, are shown in the figure above. The long-run average cost curve goes through points

Which of the following statements is TRUE?

-In the above figure, the intersection of curves A and C is the point at which

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

-The production and cost information provided in the table above for Flaming Fernando's, a restaurant that sells Fiery Frijoles, is for the