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Microeconomics Study Set 46

Business

Quiz 7 :

Costs

Quiz 7 :

Costs

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A firm has a production function of img , the rental rate of capital is $50, and the wage rate is $15. In the short run, img 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.
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D

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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. img 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 ____.
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B

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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.
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Use the following table to answer the question. img 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 $_____.
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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: img Menard's economic profit is $____.
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(Figure: Total Cost and Quantity of Output III) Which of the following statements is (are) TRUE? img I. At point A, ATC > MC. II) At point B, ATC = MC. III) At point C, ATC < MC.
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(Table: Detailers for Cars I) img 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 _____.
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(Figure: Total Cost and Quantity of Output III) img The firm's average total cost curve appears in which of the following panels? img
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Use the following table to answer the question. img 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. img img At an output level of 1, the average total cost is $____.
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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 $____.
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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 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: img Menard's accounting profit is $____.
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Use the following table to answer the question. img At an output of 5, the average variable cost is $____.
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Which of the following statements is (are) TRUE? I. MC = ΔTC/ΔQ II. MC = ΔVC/ΔQ III. Marginal cost falls as returns to labor begin to diminish.
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