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Exam 12: The Costs of Production

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Question 71

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A college student is thinking about running an ice-cream truck over the summer.Which of the following would likely be included in the total cost of the business?

A) The cost of ice cream cones
B) The cost of the truck
C) The opportunity cost of the student's time
D) All of these would be included in total cost.

E) None of the above
F) B) and C)

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Question 72

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Suppose Larry's Lariats produces lassos,and uses nine feet of rope to make each lasso.The rope is put into a machine that automatically cuts it to the right length,then seals the ends to prevent fraying.The rope is then hand tied,dipped,and wound before being placed in a packaging machine to prepare it for retail sale.The total costs for this company would include:

A) the cost of rope.
B) employee's wages.
C) the rope-cutting machine.
D) All of these expenses would be included in total cost.

E) B) and C)
F) None of the above

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Question 73

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Implicit costs are costs that:

Suppose Larry's Lariats produces lassos in a factory,and uses nine feet of rope to make each lasso.The rope is put into a machine that automatically cuts it to the right length,then seals the ends to prevent fraying.The rope is then hand tied,dipped,and wound before being placed in a packaging machine to prepare it for retail sale.Which of the following would be considered a variable cost for this company?

Constant returns to scale refers to when:

A college student is thinking about running an ice-cream truck over the summer.What would economists say is the student's main objective?

Suppose Winston's annual salary as an accountant is $60,000,and his financial assets generate $4,000 per year in interest.One day,after deciding to be his own boss,he quits his job and uses his financial assets to establish a consulting business,which he runs out of his home.To run the business,he outlays $8,000 in cash to cover all the costs involved with running the business,and earns revenues of $150,000.What are Winston's explicit costs?

An example of an ongoing expense for a toy company would be buying:

Suppose Bev's Bags makes two kinds of handbags-large and small.Bev rents an industrial space where she keeps the fabric,the industrial sewing machine,her measuring board and cutting shears,extra needles,thread and buttons,and labels.Which of the following would be considered a variable cost of this company?

Suppose Winston's annual salary as an accountant is $60,000,and his financial assets generate $4,000 per year in interest.One day,after deciding to be his own boss,he quits his job and uses his financial assets to establish a consulting business,which he runs out of his home.To run the business,he outlays $8,000 in cash to cover all the costs involved with running the business,and earns revenues of $150,000.What costs would be considered when calculating accounting profit?

Total revenue can be defined as:

In the long run when an increase in the quantity of output increases average total cost,this is called:

The principle of diminishing marginal product states:

Suppose Sam's Shoe Co.makes one kind of shoe.An example of a fixed cost for this company would be:

A cigar factory employs 20 workers and produces 1,000 cigars a day.The company reduces the workforce to 19 workers and produces 912 cigars a day.The 20^th worker:

The relationship between the quantity of inputs and the quantity of outputs is called:

Diminishing marginal product:

When economic profits are zero,accounting profits are most likely:

Accounting profits are calculated as:

Accounting profits can tell a business _______________________,and economic profits can tell a business ______________________.