Exam 21:Cost Minimization-Part A

A firm has fixed costs of $2,000.Its short-run production function is y= 4x^1/2,where x is the amount of variable factor it uses.The price of the variable factor is $3,000 per unit.Where y is the amount of output,the short-run total cost function is

(Multiple Choice)

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Question 21

The Chrysler Belvedere Truck Plant is attempting to minimize production costs.Over one month,1,600 fenders are needed on the production line,which runs continuously.If it costs $200 to set up the stamping press to produce fenders and $1 per month to store produced fenders,how many times should the stamping press be run per month?

(Multiple Choice)

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Question 22

The law firm of Dewey,Cheatham,and Howe specializes in accident injury claims.The firm charges its clients 25% of any damage award given.The only cost to the firm of producing an accident injury claim is the time spent by a junior partner working on the case.Junior partners are paid $100 per hour for this drudgery.If the firm is suing for damages of $250,000 and if its chances of winning a case are 1/25h,where h is the number of hours spent working on the case,then to maximize its profits,how many hours should it have the junior partner spend working on the case?

(Multiple Choice)

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Question 23

A politician facing reelection can win votes according to the following process: V =500S^0.20M^0.60,where S is hours of making campaign speeches and M is the number of flyers mailed.Making speeches costs $10 per hour,mailing flyers costs $.50 per flyer,and $2,000 are available to spend on the campaign.Assuming the politician wants to maximize votes,how should the budget be allocated between speeches and mailing flyers?

(Multiple Choice)

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Question 24

Two firms,Wickedly Efficient Widgets (WEW)and Wildly Nepotistic Widgets (WNW),both produce widgets,using the same production function y=K^1/2L^1/2,where K is the amount of labor used and L is the amount of capital used.Each company can hire labor at $1 per unit of labor and capital at $9 per unit.Each company produces 90 widgets per week.WEW chooses its input combinations to produce in the cheapest way possible.Although it produces the same output per week as WEW,WNW is required by its dotty CEO to use twice as much labor as WEW.How much higher are WNW's total costs per week than WEW's?

(Multiple Choice)

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Question 25

Ben runs a cookie factory.His cookies are made with sugar,peanut oil,and soybean oil.The number of boxes of cookies that he produces is f (su,po,so)=min{su,po + 2so},where su is the number of bags of sugar,po the number of canisters of peanut oil,and so the number of canisters of soybean oil that he uses.The price of a bag of sugar is $12.The price of a canister of peanut oil is $6.The price of a canister of soybean oil is $19.If Ben makes 254 boxes of cookies in the cheapest way possible,how many canisters of soybean oil will he use?

(Multiple Choice)

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Question 26

A firm has a production function described as follows:"Weekly output is equal to the square root of the minimum of the amount of capital and the number of hours of labor used per week." Suppose that the cost of a unit of capital is r and the price of a unit of labor is w and the level of output is y.Write down the long-run total cost as a function of w,r,and y.

(Short Answer)

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Question 27

Al's production function for deer is f(x1,x2)=(2x₁ + x₂)^1/2,where x1 is the amount of plastic and x2 is the amount of wood used.If the cost of plastic is $6 per unit and the cost of wood is $1 per unit,then the cost of producing 5 deer is

(Multiple Choice)

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Question 28

The production function is f (L,M)=4L^1/2M^1/2,where L is the number of units of labor and M is the number of machines used.If the cost of labor is $36 per unit and the cost of machines is $4 per unit,then the total cost of producing 6 units of output will be

(Multiple Choice)

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Question 29

If the production function is f (x1,x2)= min{x1,x2}0,then the cost function is c(w1,w2,y)=min{w1,w2}y.

(True/False)

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Question 30

If it costs $20 to set up and later clean a bagel press and bagels cost $1 per week per bagel to store,how many times should the bagel press be run each week to produce 360 bagels a week to be sold continuously?

(Multiple Choice)

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Question 31

A firm has production function f (x1,x2,x3,x4)= min{x1,x2}+min{x3,x4}.This firm faces competitive factor markets where the prices for the four factors are w1 =$4,w2 = $8,w3= $5,and w4 =$3.The firm must use at least 20 units of factor 2.The cost of producing 100 units in the cheapest possible way is

(Multiple Choice)

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Question 32

The production function for drangles is f (x1,x2)=(min{x1,3x2})^1/2,where x1 is the amount of sugar and x2 is the amount of dough used.At the factor prices,w1= w2 = $1,the minimum cost of producing y drangles is

(Multiple Choice)

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Question 33

A firm uses a single variable input x to produce outputs according to the production function f (x)=300x 6x2.This firm has fixed costs of $400.This firm's short-run marginal cost curve lies below its short-run average variable cost curve for all positive values of x.

(True/False)

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Question 34

A firm produces Ping-Pong balls using two inputs.When input prices are ($15,$7)the firm uses the input bundle (17,71).When the input prices are ($12,$24)the firm uses the bundle (77,4).The amount of output is the same in both cases.Is this behavior consistent with WACM?

(Multiple Choice)

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Question 35

Quasi-fixed costs are those costs that can be avoided if and only if a firm produces zero output.

(True/False)

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Question 36

A new metal alloy is discovered that uses copper and zinc in fixed proportions where each unit of the alloy requires 2 units of zinc and 2 units of copper.If no other inputs are required,if the price of zinc is $3 per unit,and the price of copper is $3 per unit and if total output is 5,000 units,what is the average cost per unit of output?

(Multiple Choice)

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Question 37

In the short run,a firm which has production function f(L,M)=4L^1/2M^1/2 must use 4 machines.If the cost of labor is $4 per unit and the cost of machines is $4 per unit,the short-run total cost of producing 48 units of output is

(Multiple Choice)

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Question 38

Two firms,Wickedly Efficient Widgets (WEW)and Wildly Nepotistic Widgets (WNW),both produce widgets,using the same production function y=K^1/2L^1/2,where K is the amount of labor used and L is the amount of capital used.Each company can hire labor at $1 per unit of labor and capital at $1 per unit.Each company produces 10 widgets per week.WEW chooses its input combinations to produce in the cheapest way possible.Although it produces the same output per week as WEW,WNW is required by its dotty CEO to use twice as much labor as WEW.How much higher are WNW's total costs per week than WEW's?

(Multiple Choice)

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Question 39

The production function is f (L,M)=4L^1/2M^1/2,where L is the number of units of labor and M is the number of machines used.If the cost of labor is $49 per unit and the cost of machines is $16 per unit,then the total cost of producing 5 units of output will be

(Multiple Choice)

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Question 40

Showing 21 - 40 of 78

Exam 21:Cost Minimization-Part A

A firm has fixed costs of $2,000.Its short-run production function is y= 4x1/2,where x is the amount of variable factor it uses.The price of the variable factor is $3,000 per unit.Where y is the amount of output,the short-run total cost function is

Al's production function for deer is f(x1,x2)=(2x1 + x2)1/2,where x1 is the amount of plastic and x2 is the amount of wood used.If the cost of plastic is $6 per unit and the cost of wood is $1 per unit,then the cost of producing 5 deer is

The production function is f (L,M)=4L1/2M1/2,where L is the number of units of labor and M is the number of machines used.If the cost of labor is $36 per unit and the cost of machines is $4 per unit,then the total cost of producing 6 units of output will be

If the production function is f (x1,x2)= min{x1,x2}0,then the cost function is c(w1,w2,y)=min{w1,w2}y.

If it costs $20 to set up and later clean a bagel press and bagels cost $1 per week per bagel to store,how many times should the bagel press be run each week to produce 360 bagels a week to be sold continuously?

A firm has production function f (x1,x2,x3,x4)= min{x1,x2}+min{x3,x4}.This firm faces competitive factor markets where the prices for the four factors are w1 =$4,w2 = $8,w3= $5,and w4 =$3.The firm must use at least 20 units of factor 2.The cost of producing 100 units in the cheapest possible way is

The production function for drangles is f (x1,x2)=(min{x1,3x2})1/2,where x1 is the amount of sugar and x2 is the amount of dough used.At the factor prices,w1= w2 = $1,the minimum cost of producing y drangles is

A firm uses a single variable input x to produce outputs according to the production function f (x)=300x 6x2.This firm has fixed costs of $400.This firm's short-run marginal cost curve lies below its short-run average variable cost curve for all positive values of x.

A firm produces Ping-Pong balls using two inputs.When input prices are ($15,$7)the firm uses the input bundle (17,71).When the input prices are ($12,$24)the firm uses the bundle (77,4).The amount of output is the same in both cases.Is this behavior consistent with WACM?

Quasi-fixed costs are those costs that can be avoided if and only if a firm produces zero output.

In the short run,a firm which has production function f(L,M)=4L1/2M1/2 must use 4 machines.If the cost of labor is $4 per unit and the cost of machines is $4 per unit,the short-run total cost of producing 48 units of output is

The production function is f (L,M)=4L1/2M1/2,where L is the number of units of labor and M is the number of machines used.If the cost of labor is $49 per unit and the cost of machines is $16 per unit,then the total cost of producing 5 units of output will be

Demand-Part A

Revealed Preference-Part A

Revealed Preference-Part B

Slutsky Equation-Part A

Slutsky Equation-Part B

Buying and Selling-Part A

Buying and Selling-Part B

Intertemporal Choice-Part A

Intertemporal Choice-Part B

Asset Markets-Part A

Asset Markets-Part B

Uncertainty-Part A

Uncertainty-Part B

Risky Assets-Part A

Risky Assets-Part B

Consumers Surplus-Part A

Consumers Surplus-Part B

Market Demand-Part A

Market Demand-Part B

Equilibrium-Part A

Equilibrium-Part B

Auctions-Part A

Auctions-Part B

Technology-Part A

Technology-Part B

Profit Maximization-Part A

Profit Maximization-Part B

Cost Minimization-Part B

Cost Curves-Part A

Cost Curves-Part B

Firm Supply-Part A

Firm Supply-Part B

Industry Supply-Part A

Industry Supply-Part B

Monopoly-Part A

Monopoly-Part B

Monopoly Behavior-Part A

Monopoly Behavior-Part B

Factor Markets-Part A

Factor Markets-Part B

Oligopoly-Part A

Oligopoly-Part B

Game Theory-Part A

Game Theory-Part B

Game Applications-Part A

Game Applications-Part B

Behavioral Economics-Part A

Exchange-Part A

Exchange-Part B

Production-Part A

Production-Part B

Welfare-Part A

Welfare-Part B

Externalities-Part A

Externalities-Part B

Information Technology-Part A

Information Technology-Part B

Public Goods-Part A

Public Goods-Part B

Asymmetric Information-Part A

Asymmetric Information-Part B

Filters

A firm has fixed costs of $2,000.Its short-run production function is y= 4x^1/2,where x is the amount of variable factor it uses.The price of the variable factor is $3,000 per unit.Where y is the amount of output,the short-run total cost function is

Al's production function for deer is f(x1,x2)=(2x₁ + x₂)^1/2,where x1 is the amount of plastic and x2 is the amount of wood used.If the cost of plastic is $6 per unit and the cost of wood is $1 per unit,then the cost of producing 5 deer is

The production function is f (L,M)=4L^1/2M^1/2,where L is the number of units of labor and M is the number of machines used.If the cost of labor is $36 per unit and the cost of machines is $4 per unit,then the total cost of producing 6 units of output will be

The production function for drangles is f (x1,x2)=(min{x1,3x2})^1/2,where x1 is the amount of sugar and x2 is the amount of dough used.At the factor prices,w1= w2 = $1,the minimum cost of producing y drangles is

In the short run,a firm which has production function f(L,M)=4L^1/2M^1/2 must use 4 machines.If the cost of labor is $4 per unit and the cost of machines is $4 per unit,the short-run total cost of producing 48 units of output is

The production function is f (L,M)=4L^1/2M^1/2,where L is the number of units of labor and M is the number of machines used.If the cost of labor is $49 per unit and the cost of machines is $16 per unit,then the total cost of producing 5 units of output will be