Question 1

Assume that you know the following cost information about Fred's widget company: Its fixed cost is $9, and its total variable cost is $6 for 1 unit; $11 for 2; $ 15 for 3; 20 for 4; and 26 for 5. Given the above information,

Accepted Answer

The marginal cost of the fourth unit is the same as the marginal cost of the second unit, and the average variable cost of four units is the same as for three units.

Question 2

​Exhibit
 
-Refer to Exhibit. In the short run the firm can move from

Accepted Answer

The answer of ​Exhibit
 
-Refer to Exhibit. In the short...

Question 3

​Exhibit
 
-Refer to Exhibit. In the long run the firm can move from

Accepted Answer

The answer of ​Exhibit
 
-Refer to Exhibit. In the long...

Question 4

Exhibit -Refer to Exhibit. For very small output levels, say q₁, costs are lowest with plant size

Accepted Answer

The answer of ​Exhibit
 
-Refer to Exhibit. For very small...

Question 5

Exhibit -Refer to Exhibit. If the firm planned to produce output level q₂, costs with plant size __________ are lower that those with _____________.

Accepted Answer

For output level q₂, the short-run average total cost (SRATC) is lower with plant size SRATC₁ compared to SRATC₂.

Question 6

A firm is operating at a scale where diseconomies of scale are present. Which of the following could help explain what that means?

Accepted Answer

Diseconomies of scale occur when a firm grows so large that the average total cost increases as output expands, due to inefficiencies and coordination problems.

Question 7

​Figure
  Figure shows the long-run average total cost curve for a firm that produces basketballs, along with four short-run average total cost curves. Each of the short-run average total cost curves corresponds to a different plant size. SRATCS1U1B11S1U1B0 corresponds to Plant size 1, SRATCS1U1B12S1U1B0 corresponds to Plant size 2, and so forth.
-In Figure, which plant is optimal if the firm is going to produce 500 basketballs per week?

Accepted Answer

The answer of ​Figure
  Figure shows the long-run average...

Question 8

​Figure
  Figure shows the long-run average total cost curve for a firm that produces basketballs, along with four short-run average total cost curves. Each of the short-run average total cost curves corresponds to a different plant size. SRATCS1U1B11S1U1B0 corresponds to Plant size 1, SRATCS1U1B12S1U1B0 corresponds to Plant size 2, and so forth.
-In Figure, what is the total cost of producing 1,500 basketballs per week assuming the firm uses the optimal plant size?

Accepted Answer

The total cost of producing 1,500 basketballs per week using the optimal plant size is $22,500. This is calculated based on the cost structure and economies of scale associated with the optimal plant size for that level of production.

Question 9

Figure -In Figure, which plant size is optimal for the firm to produce q_B units of output each week?

Accepted Answer

The answer of ​Figure
 
-In Figure, which plant size is...

Question 10

Figure -In Figure, which plant size is optimal for the firm to produce q_C units of output each week?

Accepted Answer

Plant 5 is the optimal size for the firm to produce qC units of output each week because it has the lowest average total cost of production.

Question 11

A firm's total product of labor curve is represented by the following data: 1 worker can produce 4 units of output; 2 workers, 10 units; 3 workers, 17 units; 4 workers, 25 units; 5 workers, 30 units; 6 workers, 35 units; 7 workers, 38 units; 8 workers, 39 units; and 9 workers, 38 units. What is the marginal product of the seventh worker? When does the law of diminishing marginal product set in? Under these circumstances would you ever choose to employ nine workers?

Accepted Answer

The answer of A firm's total product of labor curve...

Quiz 12: The Firm Production and Costs

Assume that you know the following cost information about Fred's widget company: Its fixed cost is $9, and its total variable cost is $6 for 1 unit; $11 for 2; $ 15 for 3; 20 for 4; and 26 for 5. Given the above information,

Exhibit -Refer to Exhibit. In the short run the firm can move from

Exhibit -Refer to Exhibit. In the long run the firm can move from

Exhibit -Refer to Exhibit. For very small output levels, say q₁, costs are lowest with plant size

Exhibit -Refer to Exhibit. If the firm planned to produce output level q₂, costs with plant size are lower that those with ___.

A firm is operating at a scale where diseconomies of scale are present. Which of the following could help explain what that means?

Figure -In Figure, which plant size is optimal for the firm to produce q_B units of output each week?

Figure -In Figure, which plant size is optimal for the firm to produce q_C units of output each week?

Quiz 12: The Firm Production and Costs

Assume that you know the following cost information about Fred's widget company: Its fixed cost is $9, and its total variable cost is $6 for 1 unit; $11 for 2; $ 15 for 3; 20 for 4; and 26 for 5. Given the above information,

​Exhibit -Refer to Exhibit. In the short run the firm can move from

​Exhibit -Refer to Exhibit. In the long run the firm can move from

​Exhibit -Refer to Exhibit. For very small output levels, say q1, costs are lowest with plant size

​Exhibit -Refer to Exhibit. If the firm planned to produce output level q2, costs with plant size __________ are lower that those with _____________.

A firm is operating at a scale where diseconomies of scale are present. Which of the following could help explain what that means?

​Figure -In Figure, which plant size is optimal for the firm to produce qB units of output each week?

​Figure -In Figure, which plant size is optimal for the firm to produce qC units of output each week?

Exhibit -Refer to Exhibit. In the short run the firm can move from

Exhibit -Refer to Exhibit. In the long run the firm can move from

Exhibit -Refer to Exhibit. For very small output levels, say q₁, costs are lowest with plant size

Exhibit -Refer to Exhibit. If the firm planned to produce output level q₂, costs with plant size are lower that those with ___.

Figure -In Figure, which plant size is optimal for the firm to produce q_B units of output each week?

Figure -In Figure, which plant size is optimal for the firm to produce q_C units of output each week?