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Marginal cost is the change in
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a & b
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An unrecoverable cost that should be disregarded in any current or future decision is also called a(n) __________ cost.
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SUNK
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Refer to Exhibit 22-11. Marginal cost of the sixth unit of output is
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A) $100.
B) $150.
C) $90.
D) $90.83.
NOT: D
TRY: A
B) $150.
C) $90.
D) $90.83.
NOT: D
TRY: A
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Alchian and Demsetz theory of why business firms exist suggests that
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the sum of team production is sometimes greater than the sum of individual production.
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Economic profit is
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E
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Which of the following is an example of market coordination?
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A) Bad weather wipes out half the pineapple crop in Hawaii, the price of pineapples rises, and consumers cut back on their purchases of pineapples.
B) The manager of a grocery store notices that his customers are buying tomato soup about as quickly as he puts it on the shelves, so he orders more tomato soup from the wholesaler.
C) The manager of a grocery store tells her employees to put the sugar-free cereals on the top shelf where adults can find them more easily.
D)a and b
E) a, b, and c
NOT: B
TRY: D
B) The manager of a grocery store notices that his customers are buying tomato soup about as quickly as he puts it on the shelves, so he orders more tomato soup from the wholesaler.
C) The manager of a grocery store tells her employees to put the sugar-free cereals on the top shelf where adults can find them more easily.
D)a and b
E) a, b, and c
NOT: B
TRY: D
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As long as there are __________ costs, __________ profit will be greater than __________ profit.
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implicit; accounting; economic
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Which of the following is true of average fixed costs in the long run?
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Average fixed costs are equal to zero since there are no fixed costs in the long run.
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There is a link between production and cost. We know this because
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what happens to MPP directs what happens to MC
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Which of the following statements is true?
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As output increases, the average variable cost curve gets closer to the average total cost curve.
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If output rises from 123 units to 143 units as another worker is hired, and the additional worker receives $15 in wages, it follows that marginal cost is
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$0.75
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As the marginal physical product of a variable input __________, the marginal cost __________.
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D
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Working alone, a person who shirks receives __________ the benefits of shirking and pays __________ the costs of shirking.
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all; all
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Carol says the following to an economist: "I hate playing the guitar, but I have taken lessons for 10 years, so I might as well continue. There is a chance I will become a professional guitarist one day." An economist would probably make which of the following statements?
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The cost you have incurred for guitar lessons is sunk. You should not allow something that can't be undone to influence a current decision.
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Refer to Exhibit 22-11. Average variable cost at two units of output is
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A) $50.
B) $60.
C) $100.
D) $110.
E) There is not enough information provided to answer this question.
NOT D
TRY: E
B) $60.
C) $100.
D) $110.
E) There is not enough information provided to answer this question.
NOT D
TRY: E
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Refer to Exhibit 22-12 above. The numbers that go in blanks (A), (B). (C), and (D), respectively, are
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12, 13, 14 and 12.
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Refer to Exhibit 22-9. Let MC1 and ATC1 represent the initial cost curves of an aluminum can producer. In which of the following cases is it most likely that the curves will shift rightward from MC1, and ATC1 to MC3 and ATC3?
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A new supplier offers to supply aluminum to the firm at a lower price.
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Refer to Exhibit 22-6. The curve labeled "L" represents the firm's __________ cost curve.
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average fixed
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Refer to Situation 22-1. What will Diane's total variable costs be if she sells 36,500 donuts in one year?
Diane's Donuts will begin selling donuts next week. Diane figures that the average variable cost to make each donut will be $0.30. She has paid $20,000 for the donut-making machinery and one year's rent.
Diane's Donuts will begin selling donuts next week. Diane figures that the average variable cost to make each donut will be $0.30. She has paid $20,000 for the donut-making machinery and one year's rent.
answer
$10,950
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Refer to Situation 22-4. What are Joe's economic profits?
Joe is the owner-operator of Joe's Haircuts Unlimited. Last year he earned $200,000 in total revenues and paid $125,000 to his employees and suppliers. During the course of the year, he received three offers to work for other barbers, with the highest offer being $50,000 per year.
Joe is the owner-operator of Joe's Haircuts Unlimited. Last year he earned $200,000 in total revenues and paid $125,000 to his employees and suppliers. During the course of the year, he received three offers to work for other barbers, with the highest offer being $50,000 per year.
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$25,000
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Which of the following statements is true?
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An implicit cost is a cost that represents the value of resources used in production for which no actual monetary payment is made.
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An economist might say, "The market guides and coordinates individuals' actions." Which of the following is an example of this happening?
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As the price of oranges rises, more individuals begin to produce oranges.
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marginal cost curve cuts the __________ curve at its lowest point.
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a and b
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short run is
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NOT: a period of time in which all inputs are variable.
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There is a monitorless team (firm) of 10 persons. The 10 persons agree to work together and split the revenue (they earn) equally. In this setting, the cost of shirking to an individual is
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lower than it would be if the individual worked alone.
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If the marginal cost curve for a firm first declines and then rises, it follows that the MPP of the variable input
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first rises and then declines.
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Managerial coordination" refers to the
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process whereby managers direct employees to perform certain tasks.
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firm can use a given plant more intensively and it can change the size of a plant. When it uses a given plant more intensively, it is holding one factor __________ and therefore the time period of production is most likely the __________.
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fixed; short run
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Refer to Exhibit 22-6. The curve labeled "I" represents the firm's __________ cost curve.
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marginal
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If the LRATC curve is falling, then
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economies of scale are present
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If the marginal physical product (MPP) of the variable input is constant over a range of output, then it follows that __________ cost will be constant over the same range of output.
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NOT: MARGINAL
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The main difference between the short run and the long run is that
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in the short run, one or more inputs are fixed.
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Refer to Exhibit 22-13. What dollar amounts go in blanks (K) and (L)?
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$280; $400
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Refer to Exhibit 22-7. The total variable cost of producing 3 units is
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$60
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Refer to Exhibit 22-l. The numbers that go in blanks E and F are, respectively,
answer
NOT: 22 AND 20
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