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Microeconomics Study Set 46

Quiz 7 :Costs

A firm has a production function of , the rental rate of capital is $50, and the wage rate is$15. In the short run, Is fixed at 80 units. The short-run marginal cost function is MC = ____.
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B

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Which of the following statements is (are) TRUE? I. If TC = $40,000 and FC =$18,000, then VC = $58,000. II. Because fixed cost does not vary with output, the fixed cost curve is a vertical line. III. The total cost and variable cost curves always have the same shape and slope. IV. When output is zero, total cost equals fixed costs. Free Multiple Choice Answer: Answer: D Tags Choose question tag A firm with a production function Q = KL (where K is units of capital and L is units of labor) has an expansion path that is given by K = 2L. The wage rate (W) is$20 and the rental on capital is $10. Assuming that the firm is using the optimal mix of inputs for any given output level, the quantity of output using three units of labor is ____. Free Multiple Choice Answer: Answer: B Tags Choose question tag Which of the following statements is (are) TRUE? I. Accounting profit equals total revenue minus accounting cost. II. Economic cost equals accounting cost minus opportunity cost. III. Economic profit equals accounting profit plus opportunity cost. IV. Economic profit equals total revenue minus economic cost. Multiple Choice Answer: Tags Choose question tag Use the following table to answer the question. At an output of 4, the average fixed cost is$____.
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A coffee shop's production function is given by Q = KL, where MPL = K and MPK = L. The barista wage rate is $10 and the rental per square foot is$15. In the short run, store size is fixed at 500 square feet. The short-run average total cost of serving 1,500 cups of coffee is $_____. Multiple Choice Answer: Tags Choose question tag Menard quit his high school teaching job, which paid$60,000 per year, to start a business that prepares students for the SAT exam. His first year in business generated the following revenues and costs: Menard's economic profit is $____. Multiple Choice Answer: Tags Choose question tag (Figure: Total Cost and Quantity of Output III) Which of the following statements is (are) TRUE? I. At point A, ATC > MC. II) At point B, ATC = MC. III) At point C, ATC < MC. Multiple Choice Answer: Tags Choose question tag (Table: Detailers for Cars I) Carl's Detailing is a small business that travels to people's homes to meticulously clean their high-end sports cars. Carl hires detailers (labor) at a wage of$80 per worker per day. A van that is used to carry cleaning supplies to clients' homes has a fixed cost of $20 per day. The table shows the relationship between the number of cars cleaned and the number of detailers. The marginal cost of cleaning the first car is _____, and the marginal cost of cleaning the third car is _____. Multiple Choice Answer: Tags Choose question tag (Figure: Total Cost and Quantity of Output III) The firm's average total cost curve appears in which of the following panels? Multiple Choice Answer: Tags Choose question tag Use the following table to answer the question. At an output of 2, the variable cost is$____.
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Suppose a firm's total cost function is given by TC = 6,000 + 2Q + 0.25Q2, where MC = 2 + 0.5Q. The output level that minimizes total cost is ____.
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(Figure: Total Cost and Quantity of Output VI) Answer the following question. At an output level of 1, the average total cost is $____. Multiple Choice Answer: Tags Choose question tag Debbie, a popular wedding photographer, is able to photograph a wedding every Saturday of the year. She charges couples$4,000 for a complete set of photographs that cost her $2,200 to print and develop. Suppose that, on one Saturday, Debbie photographs her niece's wedding without charge, but her niece insists on paying Debbie$2,200 to cover her printing and developing costs. What is Debbie's economic cost of photographing her niece's wedding?
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A fixed cost:
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Suppose a firm's total cost curve is TC = Q3 - Q2 + Q + 10. At the quantity that minimizes average variable cost, the marginal cost is equal to $____. Multiple Choice Answer: Tags Choose question tag A coffee shop's production function is given by Q = KL, where MPL = K and MPK = L. The barista wage rate is$10 and the rental per square foot is $15. In the short run, store size is fixed at 500 square feet. The long-run average total cost of producing 1,500 cups of coffee is$_____.
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Menard quit his high school teaching job, which paid $60,000 per year, to start a business that prepares students for the SAT exam. His first year in business generated the following revenues and costs: Menard's accounting profit is$____.
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