Cost Production Homework

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COSTS OF PRODUCTION 15. Total Cost of 5 units = _________ 1. Total fixed Cost of 5 units = _________ 16. Total Variable Cost of 5 units = _________ 2. Total fixed Cost of 7 units = _________ 17. Average fixed Cost of 2 units = _________ 3. Average fixed Cost of 7 units = _________ 4. Marginal Cost of 6th unit = _______ 18. Average Variable Cost of 9 units = _________ 5. Total Cost of 5 units = _________ 19. Marginal Cost of 4th unit = _______ 6. Total Variable Cost of 5 units = _________ 20. Total Cost of 5 units = _________ 7. Average Variable Cost of 2 units = _________ 21. Average Cost of 5 units = _________ 8. Average Variable Cost of 9 units = _________ 22. Average Cost of 5 units = _________ 9. Marginal Cost of 2nd unit = _______ 23. Total Variable Cost of 5 units = _________ 10. Marginal Cost of 9th unit = _______ 24. Marginal Cost of 5th unit = _______ 11. Total fixed Cost of 5 units = _________ 25. Total fixed Cost of 20 units = _________ 12. Total fixed Cost of 7 units = _________ 26. Marginal Cost is greatest for which quantity? ______________ 13. Average fixed Cost of 7 units = _________ 14. Marginal Cost of 4th unit = _______ NAME: ________________________________ QUANTITY TOTAL COST 0 6000 1 6200 2 6800 3 7680 4 9120 5 11000 6 13200 7 17500 8 22000 9 30000 Matching Exercise – Costs of Production TERM DEFINITION 1. Implicit Cost a. The area in which every firm will produce. 2. Normal Profit ( b. Another name for the long run average total cost curve. 3. Factor substitution 4. Explicit Co 5. Alternative cost 6. Decreasing Returns to Scale 7. Envelope Curve c. The cost of self-owned, self-utilized resources d. The profits necessary to ensure that a firm stays in business. Considered by economists to be part of implicit costs. e. The change in total cost associated with a one unit change in output. f. Inputs that rise and fall with the quantity of output. 8. MC=MR rule g. The substituting of one input for another to produce a given level of output. 9. Marginal Cost h. The addition to total revenue from selling one more unit of the product 10. Economic profit i. The ordinary expenses of the firm that accountants include, such as payroll costs and payments for raw materials. Accounting Costs 11. Profit maximization in the short run j. A cost that has been incurred and cannot be recovered 12. Total fixed costs k. Costs of the fixed inputs such as rent. Does not change with changes in output. Also called overhead costs. 13. Constant costs industry 14. Stage II 15. Production function 16. Shutdown point 17. Variable input 18. Marginal Revenue 19. Sunk Cost 20. Variable Costs Name: ______________________ FILE: COST MATCHING 4-02 l. The costs resulting from variable inputs. m. The rule a firm should follow to find the profit maximizing quantity. n. The production relationship that would lead to increasing costs. o. The value of what particular resources could have produced had they been used in the best alternative way; opportunity cost. p. An industry with a horizontal long run supply curve; its expansion does not result in an increase or decrease in input prices. q. The difference between total cost and total revenue. r. The relationship between the inputs used in production and the level of output. s. Considered to be the goal of every firm. t. The minimum point on the AVC. The lowest price at which the firm will produce. CONSUMER CHOICE MATCHING EXERCISE ECONOMICS TERMS 1. Total utility 2. Anchoring d. Observation that additional quantities of a given good generally have decreasing value for a consumer. 3. The ‘law’ of diminishing marginal utility e. Maximum amount of money a consumer will pay for an additional unit of some good. 4. Marginal analysis f. 5. Behavioral Economics g. A situation in which the usefulness of a product increases with the number of consumers who use it. 6. Consumer surplus 7. Giffen Good Typical story used to explain marginal utility. 8. Inferior good h. Quantity demanded increases when a consumer’s (real) income rises. 9. Indifference curve i. Quantity demanded decreases when a consumer’s (real) income rises. j. Optimal combination of goods for a consumer. 10. Market demand curve 11. The ‘law’ of demand 12. Network externality 13. Normal good k. Method for calculating choices that best promotes the decision maker’s objective. 14. Diamonds versus water paradox l. 15. Sunk Cost DEFINITIONS a. Horizontal summation of individual demand curves. b. Difference between total utility and total expenditures for a given quantity of some good. c. The idea of relating an unknown value to some other known value, even if there is no connection between the two concepts Observation that a lower price generally increases the amount of a good that people in a market are willing to buy. m. A cost that has already been paid and cannot be recovered n. The study of situations in which people maker choices that do not appear to be economically rational. o. Line showing all possible combinations of two goods a consumer finds equally desirable. p. An upward sloping demand curve that might exist in the case of a very inferior good.. Name: __________________________________ DATE:_______________ FILE: KINGSTON/CONSUMER CHOICE MATCHING A.M. Horowitz February 2017 PRODUCTION HOMEWORK QUESTIONS 1. What is the marginal product of labor (MP or MPP)? Why is the curve shaped the way it is? 2. Explain and describe each of the four production relationships. 3. Indicate whether each of the following are long-run or short-run choices. Explain why. a. A law partnership signs a 5 year lease for an office complex. b. A jeans company asks its assembly-line workers to work an extra shift this week. c. A local oil refinery plans a complete restructuring of its production process, including relocating the plant. d. The local college decides to offer an extra section of micro-economics this summer. e. A farmer increases the quantity of water applied to his fields. f. The university hires a new football coach on a three year contract. g. The corner hot dog vender decides to buy an additional cart. 4. In what two ways can “returns to scale” be used. Give an example of each way. A.M. Horowitz 6/06 FILE: PRODUCTION HOMEWORK QUESTIONS COST OF PRODUCTION HOMEWORK QUESTIONS 1. What happens to the difference between average total cost and average variable cost as a firm’s output expands? Explain. 2. How would each of the following affect average total cost (ATC), average variable cost (AVC) and marginal cost? a. an increase in the cost of the lease of the firm’s building b. a reduction in the price of electricity c. a reduction in wages paid to assembly line workers d. an increase in the salary of the president of the firm e. a reduction in the price of tags used to label the firm’s product 3. Suppose a firm is producing 1,000 units of output. Its average fixed costs are $100. Its average variable costs are $50. What is the total cost of producing 1000 units of output? 4. “There are no fixed costs in the long run.” True or false? Explain. 5. Suppose a firm is operating at the minimum point of its short-run ATC curve, so that MC=ATC. Under what circumstances would it choose to alter the size the size of its plant? Explain. 6. For which of the following types of firms would you expect diseconomies of scale (decreasing returns) to set in at relatively low levels of output? Why? a. a copy shop b. a hardware store c. a dairy d. an automobile manufacturer e. a vodka manufacturer f. a newspaper g. a toy store SOURCE: TREGARTHEN AND HITTEWBERG. MICROECONOMICS, 2ND EDITION A.M. Horowitz 6/05 FILE: PRODUCTION HOMEWORK QUESTIONS
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