Explicit costs are costs that:
A. require a firm to spend money.
B. are zero when no output is produced.
C. do not depend on the quantity of output produced.
D. depend on the quantity of output produced.
A. require a firm to spend money.
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Suppose Kate's Great Crete (KGC) has annual variable costs of VC = 30Q + 0.0025Q2 and marginal costs of MC = 30 + 0.005Q, where Q is the number of cubic yards of concrete it produces per year. In addition, it has an avoidable fixed cost of $50,000 per year. KGC's demand function is Qd = 20,000 - 400P. What is KGC's average cost function?
A. AC = (50,000/Q) + 50 + 0.005Q B. AC = (20,000/Q) + 30 + 0.005Q C. AC = (50,000/Q) + 30 + 0.0025Q D. AC = 50,000 + 30Q + 0.0025Q2
Refer to Figure 9.5. If the government establishes a price floor of $2.50, how many pounds of berries will be sold?
A) 200 B) 300 C) 400 D) 600 E) 800
A firm currently employs four workers in a sandwich shop, and produces sandwiches at a total cost per sandwich (ATC) of $3. The sandwiches sell for $5. If the marginal cost of hiring another worker to produce sandwiches is $5.50 per sandwich, then:
A. it will cost $5.50 to make another sandwich, which can only be sold for $5. B. the firm should not hire a fifth worker. C. the firm will lose $0.50 per sandwich if it hires another worker. D. All of these are true.
Consumer surplus:
A. does not exist in equilibrium. B. is illustrated by the area under the demand curve and above the market price. C. is illustrated by the area under the demand curve and below the market price. D. is illustrated by the area above the supply curve and under the demand curve.