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Exam 12: The Costs of Production

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Question 51

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Suppose Bev's Bags makes two kinds of handbags-large and small.Bev rents an industrial space where she keeps the fabric,the industrial sewing machine,her measuring board and cutting shears,extra needles,thread and buttons,and labels.Which of the following would be considered a variable cost of this company?

A) The rent
B) The fabric
C) The cutting shears
D) None of these would be considered a variable cost.

E) A) and B)
F) All of the above

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Question 52

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If the marginal cost of hiring another worker to produce sandwiches is $4 per sandwich,and sandwiches sell for $5 each,then:

A) another worker should be hired.
B) another worker should not be hired.
C) two more workers should be hired.
D) Cannot answer this without more information.

E) C) and D)
F) B) and D)

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Question 53

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Diseconomies of scale refers to returns that occur in the long run when:

Returns that occur in the long run when an increase in the quantity of output increases average total cost are called:

Variable costs are:

Suppose Winston's annual salary as an accountant is $60,000,and his financial assets generate $4,000 per year in interest.One day,after deciding to be his own boss,he quits his job and uses his financial assets to establish a consulting business,which he runs out of his home.To run the business,he outlays $8,000 in cash to cover all the costs involved with running the business,and earns revenues of $150,000.What are Winston's economic profits?

Marginal cost:

Suppose Larry's Lariats produces lassos in a factory,and uses nine feet of rope to make each lasso.The rope is put into a machine that automatically cuts it to the right length,then seals the ends to prevent fraying.The rope is then hand tied,dipped,and wound before being placed in a packaging machine to prepare it for retail sale.Which of the following would be considered a fixed cost for this company?

A college student is thinking about running an ice-cream truck over the summer.Which of the following would likely be an ongoing expense of the business?

Suppose Bev's Bags makes two kinds of handbags-large and small.Bev rents an industrial space where she keeps the fabric,the industrial sewing machine,her measuring board and cutting shears,extra needles,thread and buttons,and labels.If Bev were to produce no bags,what would her variable cost include?

Suppose Larry's Lariats produced 25,000 lassos and sold each for $10.What was the profit for this company?

Total cost includes:

The larger the implicit costs of a business:

Average product measures:

Suppose Sam's Shoe Co.makes one kind of shoe.An example of a fixed cost for this company would be:

Suppose Bev's Bags makes large handbags and small handbags.They sold 70,000 large bags for $45 each and 25,000 small bags for $15 each.What was the total revenue for this company?

Suppose Bev's Bags makes two kinds of handbags-large and small.Bev rents an industrial space where she keeps the fabric,the industrial sewing machine,her measuring board and cutting shears,extra needles,thread and buttons,and labels.Bev can produce three bags an hour,regardless of the size of bag.Which of the following would be considered a fixed cost of this company?

When economic profits are positive,accounting profits could be:

Suppose Chip's Chips produces bags of potato chips.An example of a fixed cost for this company would be:

A sandwich shop has six months left on its lease to its storefront and equipment and currently employs three workers who work on an on-call basis,with no contract.Ingredients are bought daily.How long is the long run for the sandwich shop?