Homework #7 – Flashcards

The following is cost information for the Creamy Crisp Donut Company: Entrepreneur's potential earnings as a salaried worker = $50,000 Annual lease on building = $22,000 Annual revenue from operations = $380,000 Payments to workers = $120,000 Utilities (electricity, water, disposal) costs = $8,000 Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000 Entrepreneur's forgone interest on personal funds used to finance the business = $6,000 Refer to the data. Creamy Crisp's accounting profit is:

Refer to the data. Creamy Crisp's explicit costs are:

Refer to the data. Creamy Crisp's implicit costs, including a normal profit, are:

Refer to the data. Creamy Crisp:

Refer to the data. Creamy Crisp's economic profit is:

Refer to the data. Creamy Crisp's total revenues exceed its total costs, including a normal profit, by:

Refer to the data. Creamy Crisp's total economic costs are:

Refer to the data. If, other things equal, Creamy Crisp's revenue fell to $286,000:

Answer the question on the basis of the following information: Refer to the data. When two workers are employed:

If you operated a small bakery, which of the following would be a variable cost in the short run?

Answer the question on the basis of the following information: Refer to the data. The marginal product of the fourth worker:

Answer the question on the basis of the following cost data: Refer to the data. The total cost of four units of output is:

Answer the question on the basis of the following cost data: Refer to the data. The average total cost of five units of output is:

Answer the question on the basis of the following cost data: Refer to the data. Total fixed cost is:

Answer the question on the basis of the following cost data: Refer to the data. If the firm closed down in the short run and produced zero units of output, its total cost would be:

Answer the question on the basis of the following cost data: Refer to the data. The marginal cost curve would intersect the average variable cost curve at about:

Answer the question on the basis of the following cost data: Refer to the data. The marginal cost of the fifth unit of output is:

Gomez runs a small pottery firm. He hires one helper at $12,000 per year, pays annual rent of $5,000 for his shop, and spends $20,000 per year on materials. He has $40,000 of his own funds invested in equipment (pottery wheels, kilns, and so forth) that could earn him $4,000 per year if alternatively invested. He has been offered $15,000 per year to work as a potter for a competitor. He estimates his entrepreneurial talents are worth $3,000 per year. Total annual revenue from pottery sales is $72,000. a. Calculate the accounting profit for Gomez's pottery firm. b. Now calculate Gomez's economic profit.

You are a newspaper publisher. You are in the middle of a one-year rental contract for your factory that requires you to pay $500,000 per month, and you have contractual labor obligations of $1 million per month that you can't get out of. You also have a marginal printing cost of $.25 per paper as well as a marginal delivery cost of $.10 per paper. a. If sales fall by 20 percent from 1 million papers per month to 800,000 papers per month, what happens to the AFC per paper? b. What happens to the MC per paper? c. What happens to the minimum amount that you must charge to break even on these costs?

In the figure, curves 1, 2, 3, and 4 represent the:

Given the table below: Identify which curve refers to:

A firm has fixed costs of $60 and variable costs as indicated in the table below. Complete the table.

(Consider This) Susie purchased a nonrefundable ticket to a soccer match for $20. It will cost her $10 worth of gas and wear and tear to drive to the match and $5 to park her car. On the day of the match, Susie's boss offers her $100 to come to work instead. In considering what to do, which of the above would be considered a sunk cost?

Accounting profits are typically:

Which of the following is most likely to be a variable cost?

If you owned a small farm, which of the following would most likely be a fixed cost?

Marginal product:

Which of the following is most likely to be an implicit cost for Company X?

If a variable input is added to some fixed input, beyond some point the resulting extra output will decline. This statement describes:

What do wages paid to factory workers, interest paid on a bank loan, forgone interest, and the purchase of component parts have in common?