Ch.13

question

Accounting profit is equal to total revenue minus

answer

Explicit costs

question

Economic profit is equal to total revenue minus

answer

the sum of implicit and explicit costs

question

Madelyn owns a small pottery factory. She can make 1,000 pieces of pottery per year and sell them for $100 each. It costs Madelyn $20,000 for the raw materials to produce the 1,000 pieces of pottery. She has invested $100,000 in her factory and equipment: $50,000 from her savings and $50,000 borrowed at 10 percent (assume that she could have loaned her money out at 10 percent, too). Madelyn can work at a competing pottery factory for $40,000 per year. The accounting profit at Madelyn's pottery factory is

answer

$75,000

question

answer

$30,000

question

If there are implicit costs of production,

answer

accounting profit will exceed economic profit

question

Which of the following is a variable cost in the short run?

answer

wages paid to factory labor

question

The 3 amigos company produced and sold 500 dog beds. The average cost of production per dog bed was $50. Each dog bed can be sold for a price of $65. The 3 amigos total costs are

answer

$25,000

question

Cindy's car wash has average variable costs of $2 and average fixed costs of $3 when it produces 100 units of output (car washes). The firms total cost is

answer

$500

question

A firm produces 300 units of output at a total cost of $1,000. If fixed costs are $100

answer

Average variable cost is $3

question

What is the shape of the marginal cost curve for this firm?

answer

Upward-sloping

question

The average fixed cost of producing 4 units is

answer

$2.50

question

The average total cost of producing 3 units is

answer

$9.33

question

The marginal cost of changing production from 3 units to 4 units is

answer

question

The efficient scale of production is

answer

4 units

question

When marginal costs are below average total costs

answer

average total costs are falling

question

If marginal costs equal average total costs

answer

Average total costs are minimized

question

If, as the quantity produced increases, a production function first exhibits increasing marginal product and later diminishing marginal product, the corresponding marginal-cost curve will

answer

be U-shaped

question

In the long run, if a very small factory were to expand its scale of operations, it's likely that it would initially experience

answer

Economies of scale

question

The efficient scale of production is the quantity of output that minimizes

answer

Average total cost

question

Which of the following statements is true ?

answer

All costs are variable in the long run

1 of 20

question

Accounting profit is equal to total revenue minus

answer

Explicit costs

question

Economic profit is equal to total revenue minus

answer

the sum of implicit and explicit costs

question

answer

$75,000

question

answer

$30,000

question

If there are implicit costs of production,

answer

accounting profit will exceed economic profit

question

Which of the following is a variable cost in the short run?

answer

wages paid to factory labor

question

The 3 amigos company produced and sold 500 dog beds. The average cost of production per dog bed was $50. Each dog bed can be sold for a price of $65. The 3 amigos total costs are

answer

$25,000

question

Cindy's car wash has average variable costs of $2 and average fixed costs of $3 when it produces 100 units of output (car washes). The firms total cost is

answer

$500

question

A firm produces 300 units of output at a total cost of $1,000. If fixed costs are $100

answer

Average variable cost is $3

question

What is the shape of the marginal cost curve for this firm?

answer

Upward-sloping

question

The average fixed cost of producing 4 units is

answer

$2.50

question

The average total cost of producing 3 units is

answer

$9.33

question

The marginal cost of changing production from 3 units to 4 units is

answer

question

The efficient scale of production is

answer

4 units

question

When marginal costs are below average total costs

answer

average total costs are falling

question

If marginal costs equal average total costs

answer

Average total costs are minimized

question

If, as the quantity produced increases, a production function first exhibits increasing marginal product and later diminishing marginal product, the corresponding marginal-cost curve will

answer

be U-shaped

question

In the long run, if a very small factory were to expand its scale of operations, it's likely that it would initially experience

answer

Economies of scale

question

The efficient scale of production is the quantity of output that minimizes

answer

Average total cost

question

Which of the following statements is true ?

answer

All costs are variable in the long run

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Ch.13

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