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Ch.7 ECON HW
Ch.7 ECON HW
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Which of the example(s) below is/are a(n) Implicit Cost(s) of production?
Forgone $100 monthly interest on a bond not purchased.
Which of the following is most likely to be an Implicit Cost for Company X?
forgone rent from the building owned and used by Company X.
The basic characteristics of the Short Run is that:
the firm does not have sufficient time to change the size of its plant.
To economists, the main difference between the Short Run and the Long Run is that:
in the long run all resources are variable, while in the short run at least one resource is fixed.
The Long Run is characterized by:
Plant capacity is variable and firms may enter/exit the industry.
The Law of Diminishing Returns indicate that:
as extra units of variable resource are added to a fixed resource, marginal product will DECLINE beyond some point.
Fixed cost is:
any cost which does NOT change when the firm changes its output.
Which of the following is most likely to be a Fixed Cost?
property insurance premiums
To the economist, Total Cost includes:
explicit and implicit costs, including a normal profit.
Total cost at 120 units of output is $10,124 and Total Cost at 121 units of Output is $10,148. What is the Marginal Cost for the 121st unit of Output?
$24. $10,148-$10,124 = $24
Given your response to the previous question, the Average Total Cost for the 121st unit of output is
$83.87 $10,148/ 121= $83.87
If 4,112 workers can produce 41,000 units of output and 4,138 workers can produce 42,400 units of output, what is Average Productivity for the first 4,112 workers?
9.97 units/workers so 41,000/4112= 9.97 units
Marginal Cost is the
change in total cost that results from producing one more or 1 less unit of output.
Assume that in the Short Run a firm is producing 100 units of Output has Average Total Costs of $200, and Average Variable Costs of $150. The firm's Total Fixed Costs are:
$5,000 TC-TVC= TFC
($200x100) - ($150x100)= ($20,000-$15,000)
Diseconomics of Scale arise primarily because:
of the difficulties involved in managing and coordinating a large business enterprise.
When a firm doubles its inputs and finds that its output has more than doubled, this is known as:
Economics of scale
The Minimum Efficient Scale (MES) of a firm:
is the smallest level of output at which long-run average total cost is minimized.
A natural Monopoly exists when:
units costs are minimized by having one firm produce an industry's entire output.
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