Exam 20: Cost Curves-Part A

Touchie McFeelie from your workbook has a production function (0.1)J^1/2 J^3/4, where J is the number of old jokes used and L is the number of hours of cartoonists' labor.Touchie is stuck with 400 old jokes for which he paid 6 dollars each.If the hourly wage rate for cartoonists is 4 dollars, then the total cost of producing 16 comics books is

In the reclining chair industry (which is perfectly competitive), two different technologies of production exist.These technologies exhibit the following total cost functions: C1(Q)= 500 + 560Q - 40Q2 + Q3 C2(Q)= 600 + 280Q - 20Q2+ Q3 Due to foreign competition, the market price of reclining chairs has fallen to $170.In the short run, firms using technology 1

Not long ago, the Canadian edition of a famous textbook on principles of economics had a diagram depicting a U-shaped average fixed cost curve.This occasioned great mirth around the campfires of some economists in the Great White North and did much to shorten a long hard winter.Explain what is wrong with drawing a U-shaped average fixed cost curve.

Hildegard, an intelligent and charming Holstein cow,grazes in a very large, mostly barren pasture with a few patches of lush grass.When she finds a new grassy area, the amount of grass she gets from it is equal to the square root of the number of hours, h, that she spends grazing there.Finding a new patch of grass on which to graze takes her 1 hour.Since Hildegard does not have pockets, the currency in which her costs are measured is time. a.What is the total cost to Hildegard of finding a new plot of grass and getting y units of grass from it? b.Find an expression for her marginal costs and her average cost per patch of grass as a function of the amount of grass she gets from each patch. c.How much time would she spend in each plot if she wanted to maximize her food intake? (Hint: Minimize average costs per unit of grass eaten.)

If marginal costs increase as output increases, then the average fixed cost curve will be U-shaped.

Mr.Dent Carr's total costs are 2s² + 45s + 30.If he repairs 15 cars, his average variable costs will be

A firm's production function is given by q = min{M, L^1/2}, where M is the number of machines and L is the amount of labor that it uses.The price of labor is $1and the price of machines is $4 per unit.The firm's long-run marginal cost curve is

A firm has the production function Q = X^1/2₁X₂.In the short run it must use exactly 15 units of factor 2.The price of factor 1 is $75 per unit and the price of factor 2 is $2 per unit.The firm's short-run marginal cost function is

A firm has a short-run cost function c(y)= 3y + 14 for y = 0 and c(0)= 10.The firm's quasi-fixed costs are

A firm's production function is given by q = min{M, L^1/2}, where M is the number of machines and L is the amount of labor that it uses.The price of labor is $1and the price of machines is $2 per unit.The firm's long-run marginal cost curve is

The marginal cost curve of a firm is MC = 8y.Total variable costs to produce 11 units of output are

A competitive firm has the short-run cost function c(y)= y3 -2y2 + 5y + 6.Write down equations for: a.The firm's average variable cost function b.The firm's marginal cost function c.At what level of output is average variable cost minimized? d.Graph the short-run supply function for this firm, being careful to label the key points on the graph with the numbers specifying the exact prices and quantities at these points.

If the average cost curve is U-shaped, then the marginal cost curve must cross the average cost curve at the bottom of the U.

Touchie McFeelie's production function for comic books is (0.1)J^1/2 J^3/4, where J is the number of jokes and L is the number of hours of cartoonists labor that he uses.If Touchie can vary both jokes and cartoonists' labor and if old jokes cost $2 each and cartoonists' labor costs $18 per hour, then the cheapest way to produce comics books requires using jokes and labor in the ratio J/L =

The VCR manufacturing business is perfectly competitive.Suppose that currently, firms that manufacture VCRs utilize either technology 1 or technology 2,whose cost functions are TC1(Q)= 340 - 20Q + Q2 TC2(Q)= 405 - 30Q + Q2 In the long run, assuming no new manufacturing technologies,what will happen in this industry?

The snow removal business in East Icicle, Minnesota,is a competitive industry.All snowplow operators have the cost function C = Q2 + 4, where Q is the number of driveways cleared.Demand for snow removal in the town is given by Qd = 120 - P.The long-run equilibrium number of firms in this industry is

If Green Acres Turf Farm's total cost of producing acres of sod is TC = 5Q2 + 25Q + 40, the marginal cost of producing the 10th acre of sod is

The marginal cost curve passes through the minimum point of the average fixed cost curve.

Florence's Restaurant estimates that its total costs of providing Q meals per month is given by TC = 8,000 + 5Q.If Florence charges $9 per meal, what is its break even level of output?

Touchie McFeelie's production function for comic books is (0.1)J^1/2 J^3/4, where J is the number of jokes and L is the number of hours of cartoonists labor that he uses.If Touchie can vary both jokes and cartoonists' labor and if old jokes cost $3 each and cartoonists' labor costs $18 per hour, then the cheapest way to produce comics books requires using jokes and labor in the ratio J/L =