micro midterm 3 Flashcards
Which of the following costs will not change as output changes?
total fixed cost
The relationship between the inputs employed by a firm and the maximum output that it can produce with those inputs is the firm’s
production function.
Golda Rush quit her job as a manager for Home Depot to start her own hair dressing salon, Goldilocks. She gave up a salary of $40,000 per year, invested her savings of $30,000 (which was earning 5 percent interest) and borrowed $10,000 from a close friend, agreeing to pay 5 percent interest per year. In her first year, Golda spent $18,000 to rent a salon, hired a part-time assistant for $12,000 and incurred another $15,000 in expenses on equipment and hairdressing material. Based on this information, what is the amount of her implicit costs for the first year?
$41,500
A characteristic of the long run is
all inputs can be changed.
The marginal product of labor is defined as
the additional output that results when one more worker is hired, holding all other resources constant.
Which of the following is true at the output level where average total cost is at its minimum?
Marginal cost equals average total cost.
Jennifer Borts moves her office from the premises she rents at a local mall to her home. As a result of this move
Jennifer’s explicit costs fall and her implicit costs rise.
In the short run, if the marginal product is at its maximum, then the
marginal cost is at its minimum.
The law of diminishing marginal returns states
that at some point, adding more of a variable input to a given amount of a fixed input will cause the marginal product of the variable input to decline.
Golda Rush quit her job as a manager for Home Depot to start her own hair dressing salon, Goldilocks. She gave up a salary of $40,000 per year, invested her savings of $30,000 (which was earning 5 percent interest) and borrowed $10,000 from a close friend, agreeing to pay 5 percent interest per year. In her first year, Golda spent $18,000 to rent a salon, hired a part-time assistant for $12,000 and incurred another $15,000 in expenses on equipment and hairdressing material. Based on this information, what is the amount of her explicit costs for the first year?
$45,500
Which of the following equations is correct?
AFC + AVC = ATC
If four workers can produce 18 chairs a day and five can produce 20 chairs a day, the marginal product of the fifth worker is
2 chairs.
Which of the following is an implicit cost of production?
rent that could have been earned on a building owned and used by the firm
When a firm produces 50,000 units of output, its total cost equals $6.5 million. When it increases its production to 70,000 units of output, its total cost increases to $9.4 million. Within this range, the marginal cost of an additional unit of output is
$145.
Which of the following is the best example of a short-run adjustment?
Your local Walmart hires two more associates.
Economic costs of production differ from accounting costs in that
economic costs add the opportunity costs of a firm using its own resources while accounting costs do not.
Which of the following is a factor of production that generally is fixed in the short run?
a factory building
Which of the following is an example of a long-run adjustment?
Walmart builds another Supercenter.
The explicit cost of production is also called
accounting cost.
Marginal cost is equal to the
change in total cost divided by the change in output.
Which of the following explains why the marginal cost curve has a U shape?
Initially, the marginal product of labor rises, then falls.
Which of the following is an example of positive technological change?
A firm’s workers participate in a training program designed to increase the number of surf boards they can produce per day.
When a firm produces more output using the same inputs or the same output using fewer inputs we say that the firm
experiences positive technological change.
The processes a firm uses to turn inputs into outputs of goods and services is called
technology.
