Question 1

Answer the question on the basis of the following output data for a firm. Assume that the amounts of all nonlabor resources are fixed.  The marginal product of the fourth worker is

Accepted Answer

A) 57.5 units of output. 
B) 60 units of output. 
C) 70 units of output. 
D) 90 units of output.

Question 2

The short run is characterized by

Accepted Answer

A) plenty of time for firms to either enter or leave the industry. 
B) increasing but not diminishing returns. 
C) fixed plant capacity. 
D) zero fixed costs.

Question 3

The vertical distance between a firm's ATC and AVC curves represents

Accepted Answer

A) AFC, which increases as output increases. 
B) AFC, which decreases as output increases. 
C) marginal costs, which decrease as output decreases. 
D) marginal costs, which increase as output increases.

Question 4

Suppose that a business incurred implicit costs of $550,000 and explicit costs of $5 million in a specific year. If the firm sold 100,000 units of its output at $52 per unit, its accounting

Accepted Answer

A) profits were $520,000 and its economic profits were $30,000. 
B) losses were $200,000 and its economic losses were $350,000. 
C) profits were $350,000 and its economic profits were $200,000. 
D) profits were $200,000 and its economic losses were $350,000.

Question 5

When average variable cost is at a minimum,

Accepted Answer

A) marginal cost is at a maximum. 
B) the average product of labor is at a minimum. 
C) the marginal product of labor is at a minimum. 
D) the average product of labor is at a maximum.

Exam 9: Businesses and the Costs of Production

Answer the question on the basis of the following output data for a firm. Assume that the amounts of all nonlabor resources are fixed. The marginal product of the fourth worker is

The short run is characterized by

The vertical distance between a firm's ATC and AVC curves represents

Suppose that a business incurred implicit costs of $550,000 and explicit costs of $5 million in a specific year. If the firm sold 100,000 units of its output at $52 per unit, its accounting

When average variable cost is at a minimum,