Exam 5: Production and Cost

Assume your company produces good X using only two inputs, capital (K) and labor (L). Also, assume L is measured on the vertical axis and K on the horizontal one. If the prices of inputs are P_K=$30 and P_L=15, and your company is behaving efficiently, what is the slope of the isoquant at the current input mix?

In general, which of the following implies that a marginal cost curve will eventually increase as a firm produces more output?

Economies of scale arise when

As output expands from 199 to 200 units and total costs rise from $2985 to $3000, the marginal cost and average cost of production are:

Currently , where MPs and MPa are the marginal products of steel and aluminum for a company whose production function is Q = s^0.5 a^0.5. Ps = Pa = $1, are the prices of steel and aluminum, and the company has a total budget of $2 to spend on these inputs, and if the market price of the output is $3 per unit, then how many units of s and a should the firm hire? What will be its output, revenues costs and profits?

Bob owns an auto parts firm. He uses a combination of steel and aluminum to produce his auto parts. All of the following combinations will finish the task on time. Steel costs $15 per unit and the aluminum costs $50 per unit. What combination of steel and aluminum should he use?

Diminishing marginal returns occur when

Assume the generic production function Q=f(K,L) displays both decreasing returns to capital (K), and decreasing returns to labor (L). Then:

The opportunity cost of any business decision is:

If a company has a cost curve of TC = 300 + 2Q + Q² and it produces 300 units per day, then its marginal cost is:

A firm produces 10 widgets that they sell for $15 each. The average variable cost for the production of 10 widgets is $13/unit. The fixed costs for this firm equal $20. What is the value of this firm's profits?

Over time, learning costs per unit tend to:

If a company has a cost curve of TC = 300 + 2Q + Q² and it produces 300 units per day, then its average (total) cost is:

Wanda Weeks is tired of running her small machine tool company. She wishes to sell it in order use her time and money elsewhere. She is currently earning a salary of $85,000 per year and a 10% return on her capital investment. She wants to take a job in a bank and invest her capital in a mutual fund. What issues should she look at before making the decision to change careers?

If a company has significant economies of scale in the long run - assuming a large market -- the company will tend to:

For many corporations, a major portion of the cost of production is fixed in the short run. Should these very large fixed costs be ignored when the executives are making output and pricing decisions? Why?

Currently the Marginal Cost equation is given by MC = 10 + 2 Q for a shoe manufacturing company. The market price per pair is $60. How many units should the company produce?

The general rule for profit maximization in a firm is to:

The following table gives cost information for the production of widgets. Some values are missing, however. Which of the following statements is true? Method 4: 10 drivers, 12 machines Hiring a driver costs $10. Each machine costs $100. Which method should he use?

If the generic production function Q=f(K,L) displays increasing returns to scale, the value of K is fixed in the short-run, and the prices of all inputs are held constant, then: