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Exam 13: The Costs of Production

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Question 91

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Scenario 13-6 Ziva is an organic lettuce farmer, but she also spends part of her day as a professional organizing consultant. As a consultant, Ziva helps people organize their houses. Due to the popularity of her home-organization services, Farmer Ziva has more clients requesting her services than she has time to help if she maintains her farming business. Farmer Ziva charges $25 an hour for her home-organization services. One spring day, Ziva spends 10 hours in her fields planting $130 worth of seeds on her farm. She expects that the seeds she planted will yield $300 worth of lettuce. -Refer to Scenario 13-6. An economist would calculate Ziva's total cost for the day of farming to equal

A) $130.
B) $250.
C) $300.
D) $380.

E) All of the above
F) B) and D)

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Question 92

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Scenario 13-21 Suppose that a small family farm sold its output for $100,000 in a given year. The family spent $25,000 on fuel, $40,000 on seed, fertilizer, and pesticides, and $25,000 on equipment, including maintenance. The family members could have earned $20,000 working at other occupations. -Refer to Scenario 13-21. What is the economic profit for the family farm?

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Accounting profit = Total reve...

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Question 93

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Table 13-6 Wooden Chair Factory -Refer to Table 13-6. Each worker at the Wooden Chair Factory costs $12 per hour. The cost of each machine is $20 per day regardless of the number of chairs produced. Assume the number of machines does not change. If the factory produces at a rate of 78 chairs per hour, what is the total machine cost per day?

The average-fixed-cost curve is always declining. How does this affect the relationship between the AVC and ATC curves?

Table 13-8 -Refer to Table 13-8. What is the average fixed cost of producing 5 units of output?

Scenario 13-21 Suppose that a small family farm sold its output for $100,000 in a given year. The family spent $25,000 on fuel, $40,000 on seed, fertilizer, and pesticides, and $25,000 on equipment, including maintenance. The family members could have earned $20,000 working at other occupations. -Refer to Scenario 13-21. What is the accounting profit for the family farm?

Average total cost is equal to

Which of the following is an example of an implicit cost?

Table 13-14 -Refer to Table 13-14. What is the total cost of producing 7 units of output?

​If an industry exhibits economies of scale, one larger firm may be able to produce goods at a lower long-run average cost than two smaller firms.

For a large firm that produces and sells automobiles, which of the following costs would be a variable cost?

Table 13-14 -Refer to Table 13-14. What is the marginal cost of the 4th unit of output?

Which of the following must always be true as the quantity of output increases?

A firm has a fixed cost of $700 in its first year of operation. When the firm produces 99 units of output, its total costs are $4,000. The marginal cost of producing the 100th unit of output is $200. What is the total cost of producing 100 units?

Suppose that a firm's long-run average total costs of producing hand-crafted chairs is $300 when it produces 10,000 chairs and $325 when it produces 11,000 chairs. For this range of output, the firm is likely experiencing

Brady Industries has average variable costs of $1 and average total costs of $3 when it produces 500 units of output. The firm's total fixed costs equal

Suppose that a firm has only one variable input, labor, and firm output is zero when labor is zero. When the firm hires 6 workers the firm produces 90 units of output. Fixed costs of production are $6 and the variable cost per unit of labor is $10. The marginal product of the seventh unit of labor is 4. Given this information, what is the average total cost of production when the firm hires 7 workers?

Analyzing the behavior of the firm enhances our understanding of

Figure 13-2 -Refer to Figure 13-2. The graph illustrates a typical production function. Based on its shape, what does the corresponding total cost curve look like?

Scenario 13-19 Doreen's Dairy produces and sells Swiss cheese. Last year, it produced 7,000 pounds and sold each pound for $6. In producing the 7,000 pounds, the dairy incurred variable costs of $28,000 and a total cost of $40,000. -Refer to Scenario 13-19. In producing the 7,000 pounds of cheese, the firm's average variable cost was