Understanding Production and Costs in Business

2. 13 Production and Costs CLICKER QUESTIONS

3. Checkpoint 13.3 Checkpoint 13.4 Checkpoint 13.1 Question 1 Question 6 Question 9 Question 2 Question 7 Question 10 Question 8 Checkpoint 13.2 Question 3 Question 4 Question 5

4. CHECKPOINT 13.1 Question 1 Which of the following is an example of an implicit cost? • wages paid to employees • interest paid to a bank on a building loan • the cost of the firm using capital that is owned by the entrepreneur of the firm • dollars paid to a supplier for materials used in production • liability insurance payments made only once a year

5. CHECKPOINT 13.1 Question 2 For a business, opportunity cost equals ____________. • the cost of labor and materials • the implicit costs of the business • all of the firm's costs including its normal profit and its economic profit • the cost of all the factors of production the firm employs • the firm’s explicit costs

6. CHECKPOINT 13.2 Question 3 If 5 workers can wash 30 cars a day and 6 workers can wash 33 cars a day, then the marginal product of the 6th worker equals ________. • 30 cars a day • 33 cars a day • 5 cars a day • 5.5 cars a day • 3 cars a day

7. CHECKPOINT 13.2 Question 4 • Increasing marginal returns occur when the _________. • average product of a worker is less than the average product of the previous worker • marginal product of a worker exceeds the marginal product of the previous worker • average product of labor is at a maximum • marginal product of labor exceeds the average product of labor. • marginal product of labor is at a maximum

8. CHECKPOINT 13.2 Question 5 Average product increases if _________. • marginal product increases • average product exceeds marginal product • marginal product is less than average product • marginal product exceeds average product • total product increases

9. CHECKPOINT 13.3 Question 6 Jay set up his hot dog stand near the business district. His total variable cost includes the _______, • annual insurance for the hot dog stand • cost of buying the hot dog stand • cost of the hot dogs and condiments • interest he pays on the funds he borrowed to pay for advertising • revenue he gets when he sells his first hot dog each day

10. CHECKPOINT 13.3 Question 7 One reason the ATC curve is U-shaped is that _____. • returns from labor increase regardless of the number of workers employed • returns from labor eventually decrease as more workers are employed • the price of the good fall as output of the good increases • the average fixed cost increases as more output is produced. • the variable cost decreases as more output is produced

11. CHECKPOINT 13.3 Question 8 If the wage rate paid to workers increases, then _____. • the AFC curve shifts upward • the AVC curve doesn’t change but ATC shifts upward • the MC curve remains the same, but the AVC curve shift upward • both the MC curve and the AVC curve shift upward • both the AFC curve and the ATC curve shift upward

12. CHECKPOINT 13.4 Question 9 Economies of scale occur whenever ________. • marginal cost decreases as output increases • output is increased by increasing all inputs by the same percentage and total cost increases by smaller percentage • marginal product increases as labor increases with capital unchanged • a firm increases its plant size and labor by the same percentage, but its output increases by a larger percentage • marginal product increases as the firm increases its plant size

13. CHECKPOINT 13.4 Question 10 The figure shows four ATC curves of a firm. If the firm produces 3,000 units per day, in the long run, it will use the plant size that corresponds to _______. • ATC1 • ATC2 • ATC3 • ATC4 • either ATC1 or ATC4