Blemba67 - BussEcon 2023-Production Cost

The foregone income that the owner of a business could have made by spending time working in another job is called:

• explicit cost.

• marginal cost.

• total cost.

• opportunity cost.

A business owner makes 50 items by hand in 6 hours. She could have earned $10 an hour working for someone else. If each item sells for $5 and the explicit costs total $14, economic profit equals:

• $0.

• $64.

• $176.

• $236.

Rachel left her job as a graphic artist, where she earned $42,000 per year, to open her own graphic arts firm. Her explicit costs for her new business include:

• only the expenses incurred for office space, equipment, and supplies.

• only her foregone salary of $42,000 per year.

• both the expenses incurred for office space, equipment, and supplies and her foregone salary of $42,000 per year.

• neither the expenses incurred for office space, equipment, and supplies nor her foregone salary of $42,000 per year.

The short run is a period during which:

• some inputs are variable and no inputs are fixed.

• some inputs are variable and some inputs are fixed.

• no inputs are variable and all inputs are fixed.

• no inputs are variable and some inputs are fixed.

The long run is a period during which:

• no inputs can be varied and all inputs are fixed.

• some inputs can be varied and some inputs are fixed.

• some inputs can be varied and no inputs are fixed.

• all inputs can be varied and no inputs are fixed.

Which of the following is an example of a long-run decision?

• An automobile manufacturing company is considering whether or not to invest in robotic equipment to develop a more cost-effective production technique.

• An automobile manufacturing company is considering whether or not to expand its existing workforce, while keeping the same factory and equipment.

• A business consulting firm is considering whether or not to hire some interns to assist with research and data-processing.

• A business consulting firm is considering whether or not to add new computers while maintaining the same number of employees.

Owen runs a delivery business and currently employs three drivers. He owns three vans that employees use to make deliveries, but he is considering hiring a fourth driver. If he hires a fourth driver, he can schedule breaks and lunch hours so that all three vans are in constant use, allowing him to increase deliveries per day from 60 to 75. It will cost an additional $75 per day to hire the fourth driver. The marginal cost per delivery of increasing output beyond 60 deliveries per day:

• is $0 since Owen does not have to purchase another van.

• is $5.

• cannot be calculated without knowing Owen’s total fixed costs.

• is $75.

If a firm shuts down for a week:

• total cost is zero.

• total cost equals total fixed cost.

• total cost equals total variable cost.

• total variable cost exceeds total fixed cost.

A factory producing calculators employs 4 workers. At current levels of operation each worker produces 40 calculators per week. Assuming labor is the only variable input and the weekly wage is $400 per worker:

• average variable cost is $10.

• variable cost is $10.

• average variable cost is $40.

• average fixed cost is $10.

When production increases, the average variable cost and average total cost curves:

• spread further apart.

• become horizontal.

• cross.

• move closer together.