Exam 7: Production and Cost in the Firm

A young chef is considering opening his own sushi bar.To do so,he would have to quit his current job,which pays $20,000 a year,and move into a storage building that he owns and currently rents to his brother for $6,000 a year.His estimated expenses at the sushi bar would be $50,000 for food and $2,000 for gas and electricity.The chef's implicit costs are equal to _____.

Table 7.6 Cakes Variable Costs Fixed Costs Total Costs 0 \ 10 1 \ 2 2 \ 3 3 \ 16 4 \ 9 5 \ 10 \ 20 -Refer to Table 7.6,which shows the costs of birthday cakes at a bakery.What is the average fixed cost of 5 cakes?

Table 7.5 ​ Labor Total Froduct Marginal Product 1 2 2 2 6 3 6 4 16 4 5 18 6 0 -Refer to Table 7.5,which shows labor,total product,and marginal product produced by a firm.At which point do diminishing marginal returns set in?

Which of the following is not an explicit cost?

If a shoe store earns more than a normal profit,its _____

Exhibit 7.6 shows the short-run cost curves for a producer.In the figure below,lines H,J,and K represent _____

The least-cost way of producing each particular rate of output is represented by the tangency points between the short-run average cost curves and the _____

Suppose a soccer coach has been making $25,000 per year but gives up his coaching job in order to make soccer shoes.If his revenue from the sale of these shoes is $50,000 and his materials cost $20,000,then his economic profit is equal to _____

Table 7.2 Labor Total Froduct (pairs of shoes) 0 0 1 20 2 50 3 75 4 80 5 75 -Refer to Table 7.2,which shows labor and the quantity of shoes produced by a firm.At which points do negative marginal returns set in?

Exhibit 7.4 -Refer to Exhibit 7.4,which shows short-run average cost curves.For output between q_a and q_b,when is average cost the lowest?

Fixed costs are defined as _____

Harvey develops gaming apps from home instead of working as an engineer and earning $50,000 a year.He has invested $20,000 to upgrade to the hardware that he needs and estimates his expenses at $17,000 a year.Downloads generated $130,000 in revenue during the first year.What are his explicit costs?

Which economic concept explains why a large drugstore chain can produce at a lower average cost than Whoville Pharmacy,an individually owned drugstore?

Table 7.4 Units of Labor Total Product Marginal Product 0 0 - 1 6 6 2 14 8 3 24 10 4 36 12 5 42 6 6 46 4 -Refer to Table 7.4,which shows labor,total product,and marginal product for a firm.Marginal returns increase with the hiring of up to _____ workers.

If a firm has explicit costs of $100,000 and implicit costs of $30,000,and generates $150,000 in revenue,then its economic profit is _____

Which of the following statements is true?

In the short run,all costs are fixed.

Table 7.1 ​ Total Revenue \ 100,000 Assistant's sal ary \ 20,000 Material \& equipment \ 15,000 Forgone salary \ 30,000 Forgone interest \ 1,000 Forgone building rental \ 10,000 -Refer to Table 7.1,which shows revenue and cost information for Sally's small business.Sally owns a small business that she operates in a building she owns.Given the information in the table below,Sally's accounting profit is equal to _____

John moved his office from a building he was renting downtown to the carriage house he owns behind his house.Which of the following statements shows how his costs change?

Table 7.5 ​ Labor Total Froduct Marginal Product 1 2 2 2 6 3 6 4 16 4 5 18 6 0 -Refer to Table 7.5,which shows labor,total product,and marginal product produced by a firm.What is the total product at Point B?