Liberty University ECON 213 InQuizitive chapter 8 complete solutions correct answers updated

Liberty University ECON 213 InQuizitive chapter 8 complete solutions correct answers updated

Chapter 8: Business Costs and Production

What are examples of the factors of production that affect the output of a car repair shop?

the tools in the garage

the amount of space available to accommodate cars in the garage

the number of competing car repair shops nearby

the number of people who own cars near the shop

the number of mechanics at the shop

Look at the table below which shows the costs of producing Big Macs. Why does the total cost equal $100 even when there are zero Big Macs produced?

Total cost includes both fixed and variable costs, and fixed costs are incurred even when they are not producing.

Total costs include only variable costs, and variable costs are incurred even when they are not producing.

Total costs include only fixed costs, and fixed costs are incurred even when they are not producing.

Total cost includes both fixed costs and variable costs, and variable costs are incurred even when they are not producing.

Profit is the amount of money a company earns.

When will firms have lower costs in the long run? Order the types of scales from that with the lowest long-run average total cost to that with the highest long-run average total cost.

What are some of the variable costs of running a flower shop?

What is the relationship between the marginal product of labor and total output? Drag the marginal product labels to the appropriate sections of the total product graph.

What are examples of explicit costs?

paying an employee’s wages

the amount of money an owner could have made by raising prices

the cost of the business owner’s time and labor

the amount of money the owner could have made by investing in an alternative activity

paying for gas for a company vehicle

It is always good to have a high output because it spreads the total fixed costs over more units.

Bill owns a grocery store chain with 2,000 total employees. Nine hundred of his employees are managers. What can we assume about the total productivity of Bill’s chain?

What should a firm do once it realizes it is in a situation with a diminishing marginal product?

The firm – stop producing additional units. If marginal product is –, the firm should continue production if it can sell the output for more than the – costs.

Place the numbers in the appropriate locations to complete the table showing total output and marginal product of labor.

Calculate the marginal product for a car repair shop that adds two mechanics and begins fixing five extra cars each week.

Which situation describes a company experiencing a loss?

A company that manufactures computers has a monthly fixed cost of $1,000. If it sells 400 computers each month, what is its average fixed cost?

Examine the data on the chart and click on the first (lowest) production level where average variable cost has gone past its minimum and begun to rise.

In the long run, firms can control their costs by adjusting the scale of their production process. Drag the appropriate description of the relationship between output and cost to the end of the correct long-run average total cost curve.

Fill in the blanks to explain why it can be bad for a company to have too much labor.

Additional workers will increase a company’s – to a certain point until gains from – begin to decline. At this point, – will continue to increase, but marginal product will diminish with each additional worker. Eventually there will be too many workers and not enough – to keep them busy, inevitably slowing down production.

Which statement accurately describes the relationship between average fixed costs and output?

Match the type of scale to the situation it describes.

An international investment banking company has a huge bureaucracy that slows down the decision-making process and increases costs.

A large computer company hires many specialists to produce its product and is able to save money by buying supplies in bulk.

A national movie theater chain has advantages in advertising costs, but has high payroll costs because of its many levels of management.

Calculate the monthly implicit costs for a business owner who devotes 200 hours per month to his business that could be spent working at $50/hour for someone else.

A firm considers hiring more workers. Will this increase total output? Apply the correct label to each part of the graph.

Match each factor of production with its definition.

How are costs different in the long run compared with the short run?

In the long run, – costs are variable and firms have – control over their costs. In the short run, costs are related to –. In the long run, costs are related to –.

A television production firm is able to produce TVs according to the short-run production table below. Click on the image to show with the hiring of which worker the diminishing marginal product begins.

What happens to total fixed and total variable costs as production increases?

For every output created, a firm needs to spend money on capital, labor, and other –. Thus, – will increase with increasing output. The – are not tied to the rate of output. Those costs – in the – run.

Yael decides that she no longer enjoys her job, and she quits to open a gluten-free, dairy-free kosher bakery. She pays a monthly rent for her store of $2,000. Her labor costs for one month are $4,500, and she spends $6,000 a month on nut flours, sugar, and other supplies. Yael was earning $2,500 a month working as a bank teller. These are her only costs. Her monthly revenue is $14,000. Which of the following statements about Yael’s costs and profit are correct?

What is the difference between economic profit and accounting profit?

– is calculated by subtracting both the explicit and the implicit costs from total revenue. – is calculated by subtracting the explicit costs from the total revenue. Economic profit is always – than accounting profit, because it takes into account more variables for –.

Hosea decides to support an entrepreneur on a new business venture. He sells $500,000 worth of stocks to put into the new business. By the end of the first year, he earns a rate of return of $25,000 on his financial investment in the business. Based on the average rate of return to stocks from the table below, Hosea made a good choice to support this new business.

The efficient scale is the production quantity at which marginal cost equals average total cost.

How does expanding the scale of production affect production costs?

Arnold and Helga decide to start selling homemade jewelry on Etsy to earn some extra income. However, the materials they use are expensive, and it takes them a long time to finish each piece of jewelry because they bicker about how it should look. In short, their process is not –. Their daughter Phillipa suggests that they design the pieces before they start making the jewelry to help increase their –. They are able to make the jewelry more quickly and decrease their – cost of production. When Arnold and Helga are able to expand the size of their operation, they are able to experience –.

Is it better to have an accounting profit or economic profit? Why?

It is better for a company to have an – profit because it means both – costs have been – the total revenue and the company is still profitable. An – profit only takes into consideration the explicit costs of doing business.

Jeff works at a grocery store in the summer. One year he considers the possibility of operating and owning a hot dog stand instead of working at the store. What are some of the implicit costs Jeff might have to consider when thinking about his new business venture?

How do you calculate total cost?

Carla owns a small cake shop with three inexperienced employees and would like to lower her costs in the long run to make her company more efficient. What can she do to lower her average total costs in the long run?

Label each resource with the factor of production it represents.

Calculate the weekly profit for a company with a total cost of $10,000 and a total revenue of $30,000.

Stephen decides to operate a painting business out of his home. Which of the following types of costs would represent fixed costs and variable costs for his painting business?

What will happen if a movie theater has too many employees working a particular shift?