Production Function and Total Costs

What relationship does this graph show?

• opportunity cost

• diminishing marginal utility in consumption

• diminishing marginal returns in production

• production possibilities

• comparative advantage

Locotek produces toy trains and pays each worker $350 per week. Five workers can produce 40 trains per week and six workers can produce 45 trains per week. The marginal product per week of the sixth worker is

• $70

• $350

• 5 trains

• 7.5 trains

• 42.5 trains

In microeconomics, the short run is defined as which of the following?

• A period that is less than one year

• A period that is between one year and four years

• A period that is too short for a firm to be able to change its level of output

• A period during which some inputs in a firm’s production process cannot be changed

• A period during which a firm’s fixed costs exceed its variable costs

As its output increases, a firm’s short-run marginal cost will eventually increase because of

• diseconomies of scale

• a lower product price

• inefficient production

• the firm's need to break even

• diminishing returns

Which of the following statements regarding accounting profits, opportunity costs, and economic profits is true?

• With positive opportunity costs, a firm can never earn economic profits.

• Accounting profits are equal to economic profits minus opportunity costs.

• If accounting profits are less than opportunity costs, there will be economic losses.

• Economic profits must always be greater than accounting profits.

• When economic profits are positive, accounting profits may be positive or negative.

Assume Nadia voluntarily leaves a job with a salary of $100 per day to open and run a restaurant instead. After deducting all explicit costs from the restaurant revenues, Nadia has a gain of $120. Assuming there are no additional implicit costs, which of the following statements is true?

• Nadia has an accounting profit of $20

• Nadia has an accounting profit of $100

• Nadia has an economic profit of $20

• Nadia has an economic profit of $120

• Nadia has an economic profit of -$20

Ryan quit a job with a daily salary and opened a business. On a daily basis, the total revenue of the business is $200, and the explicit costs of the business are $120. If Ryan has zero economic profits, what must be the value of Ryan’s implicit costs?

• $0

• $80

• $120

• $200

• $280

What is the total fixed cost at 3 units of output?

• $0

• $20

• $35

• $40

• $60

If the cost of a unit of labor is $20 and total fixed cost is $100, what is the total cost of producing 20 units of output?

• $20

• $100

• $120

• $140

• $160

What is the total variable cost of the first unit of output?

• $5

• $7

• $13

• $20

• $25