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Exam 13: The Costs of Production

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Question 71

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In his book, An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith credits economies of scale to

A) competition.
B) opportunity costs.
C) specialization.
D) incentives.

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

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Question 72

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Average variable cost will decrease if .

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marginal c...

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Question 73

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Average total cost and marginal cost express information that is already contained in a firm's total cost.

How can the average-fixed-cost curve be declining when fixed cost is constant?

Table 13-17 Consider the following table of long-run total cost for four different firms: -Refer to Table 13-17. Which firm has economies of scale and then diseconomies of scale as output increases from 1 to 7?

Define profit.

Stick Storage manufactures and sells computer flash drives. Last year it sold 2 million flash drives at a price of $10 each. For last year, the firm's

Scenario 13-11 Walter builds birdhouses. He spends $5 on the materials for each birdhouse. He can build one in 30 minutes. He is semi-retired but earns $8 per hour at the local hardware store. He can sell a birdhouse for $20 each. -Refer to Scenario 13-11. The implicit cost for one birdhouse is

Since the 1980s, Wal-Mart stores have appeared in almost every community in America. Wal-Mart buys its goods in large quantities and, therefore, at cheaper prices. Wal-Mart also locates its stores where land prices are low, usually outside of the community business district. Many customers shop at Wal-Mart because of low prices. Local retailers, like the neighborhood drug store, often go out of business because they lose customers. This story demonstrates that

Economists in the field of industrial organization study how

Foregone investment opportunities are an example of

Diseconomies of scale occur when a firm's

Pete owns a shoe-shine business. Which of the following costs would be implicit costs?

Diminishing marginal productivity implies decreasing total product.

Table 13-19 -Refer to Table 13-19. What is the total output of five workers?

Table 13-4 Charles's Math Tutoring -Refer to Table 13-4. Suppose that Charles's math tutoring company has a fixed cost of $50 per month for his cell phone. Each worker costs Charles $60 per day. As output increases from 0 to 45 students, Charles's total cost curve

Describe how an accounting firm could experience economies of scale.

If the marginal cost of producing the tenth unit of output is $2.50, and if the average total cost of producing the tenth unit of output is $3, then at ten units of output, average total cost is rising.

The most likely explanation for economies of scale is

Table 13-3 -Refer to Table 13-3. At which number of workers does diminishing marginal product begin?