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Chapter 13 HW Costs of Production
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Terms in this set (15)
Kirsten sells 300 glasses of lemonade at $0.50 each. Her total costs are $125. Her profits are
a. $25
b. $124.50
c. $125
d. $150
a. $25
Susan used to work as a telemarketer, earning $25,000 per year. She gave up that job to start a catering business. In calculating the economic profit of her catering business, the $25,000 income that she gave up is counted as part of the catering firm's
a. total revenue
b. implicit costs.
c. explicit costs.
d. marginal costs.
b. implicit costs
Gavin has decided to start his own snow removal business. To purchase the necessary equipment, Gavin withdrew $2,000 from his savings account, which was earning 3% interest, and borrowed an additional $4,000 from the bank at an interest rate of 7%. What is Gavin's annual implicit costs of the financial capital that has been invested in the business?
a. $60
b. $280
c. $340
d. $660
a. $60
Dolores used to work as a high school teacher for $40,000 per year but quit in order to start her own catering business. To invest in her factory, she withdrew $20,000 from her savings, which paid 3 percent interest, and borrowed $30,000 from her uncle, whom she pays 3 percent interest per year. Last year she paid $25,000 for ingredients and had revenue of $60,000. She asked Louis the accountant and Greg the economist to calculate her profit for her.
a. Louis says her costs are $25,900, and Greg says her costs are $66,500.
b. Louis says her costs are $25,000, and Greg says her costs are $65,000.
c. Louis says her profit is $66,500, and Greg says her costs are $66,500.
d. Louis says her profit is $75,000, and Greg says her costs are $41,500.
a. Louis says her costs are $25,900, and Greg says her costs are $66,500.
Dolores used to work as a high school teacher for $40,000 per year but quit in order to start her own catering business. To invest in her factory, she withdrew $20,000 from her savings, which paid 3 percent interest, and borrowed $30,000 from her uncle, whom she pays 3 percent interest per year. Last year she paid $25,000 for ingredients and had revenue of $60,000. She asked Louis the accountant and Greg the economist to calculate her profit for her.
a. Louis says her profit is $25,900, and Greg says her profit is $66,500.
b. Louis says her profit is $35,000, and Greg says she lost $5,900.
c. Louis says her profit is $34,100, and Greg says she lost $6,500.
d. Louis says her profit is $34,100, and Greg says her profit is $34,100.
c. Louis says her profit is $34,100, and Greg says she lost $6,500.
Total revenue minus both explicit and implicit costs is called
a. accounting profit
b. economic profit
c. average total cost
d. None of the above is correct
b. economic profit
Total revenue minus only explicit costs is called
a. accounting profit.
b. economic profit.
c. average total cost.
d. None of the above is correct
a. accounting profit.
Number of Workers. Output (number of pet visits)
0 0
1 20
2 45
3 60
4 70
What is the marginal product of the second worker?
a. 15
b. 20
c. 22.5
d. 25
d. 25
Number of Workers. Output (number of pet visits)
0 0
1 20
2 45
3 60
4 70
What is the marginal product of the third worker?
a. 15
b. 20
c. 35
d. 60
a. 15
Number of Workers. Output (number of pet visits)
0 0
1 20
2 45
3 60
4 70
Alyson's pet sitting service experiences diminishing marginal productivity with the addition of the
a. first worker
b. second worker
c. third worker
d. fourth worker
c. third worker
The marginal product of labor can be defined as
a. change in profit/change in labor
b. change in output/change in labor
c. change in labor/change in output
d. change in labor/change in total cost
b. change in output/change in labor
Let L represent the number of workers hired by a firm and let Q represent that firm's quantity of output. Assume two points on the firm's production function are (L = 12, Q = 122) and (L = 13, Q = 132). Then the marginal product of the 13th worker is
a. 8 units of output.
b. 10 units of output.
c. 122 units of output.
d. 132 units of output.
b. 10 units of output.
Marginal cost is equal to
a. TC/Q
b. ΔATC/Q
c. ΔTC/ΔQ
d. ΔQ/ΔTC
c. ΔTC/ΔQ
When marginal cost exceeds average total cost,
a. average fixed cost must be rising.
b. average total cost must be rising.
c. average total cost must be falling.
d. marginal cost must be falling.
b. average total cost must be rising.
The most likely explanation for economies of scale is
a. coordination problems.
b. specialization of labor.
c. increasing marginal cost.
d. decreasing marginal cost.
b. specialization of labor.
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