4.4 Older oil wells that produce fewer than 10 barrels of oil a day are called “stripper" wells. Suppose thatyou and a partner own a stripper well that can produce 8 barrels of oil per day, and you estimate that themarginal cost of producing another barrel of oil is $80. In making your calculation, you take into accountthe cost of labor, materials, and other inputs that increase when you produce more oil. Your partner looksover your calculation of marginal cost and says: “You forgot about that bank loan we received two yearsago. If we take into account the amount we pay on that loan, it adds $10 per barrel to our marginal costof production." Briefly explain whether you agree with your partner's analysis.

Answered: 4.4 Older oil wells that produce fewer…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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hi Suppose you build bird houses. One day, you double the time you spend building and double the wood, nails, paint, and all the other inputs in order to build twice as many bird houses. What kind of production function is this? options: increasing returns to scale constant returns to scale decreasing returns to scale zero returns to scale
Suppose that Bill owns an automobile collision repair shop and the table below shows the quantity of cars repaired per month according to how many workers Bill hires. Assume he pays each worker $5,000 per month and his fixed cost equals $8,000 per month. Using the information provided, complete the table given below. (Enter your responses rounded to two decimal places.) Quantity of Workers Quantity of Cars per Month Average Total Cost Fixed Cost Variable Cost Total Cost $8,000 1 20 $ 30 3 40 50 55
4. Ikea Inc., a home remodeling business. The number of square feet they can remodel in a day is described by the Cobb-Douglas production function Q= F (L,K)= 4K5L0.5 where L is their number of workers and K is units of capital. The wage rate is $5 a day, and a unit of capital costs $20 a day. What is their minimum cost input combination for remodeling (Q=200) 200 square feet a day? What is the total minimum cost level? (15p)
A firm has a fixed production cost of $4000. For the first 100 units of production, the firm has a marginal cost of $50 per unit produced. Producing more than 100 units has a marginal cost of $70 per unit produced. The firm cannot produce more than 150 units. How much does it cost to produce at q=0? at q=50? at q=100? at q=125? at q=150? Graph the firm’s marginal cost function
Briefly explain what is meant by the term "fixed costs" and provide three examples of same. What determines a firm's level of fixed costs?
8.8
Question 13 of 15 Production and Costs: End of Chapter Problems 12. Consider the relationship between average and marginal values. a. Suppose a basketball player is currently averaging 18 points per game but then, in her next game, scores 20 points. As a result of her marginal score of her average score will b. If marginal cost is less than average total cost, then average total cost is Therefore, when the marginal cost curve lies below the average total cost curve, the average total cost curve must be c. If marginal cost is greater than average total cost, then average total cost is Therefore, when the marginal cost curve lies above the average total cost curve, the average total cost curve must be Question Source: Chiang 4e - Economics Principles For A Changing World Publisher: Worth Publishers a 8:42 PM 36 32°F A O i I E 4) 12/8/2021 12
F25
The table below shows the maximum output levels for Here and There. Cloth Computers Here 110 or 60 There 70 or 120 a. What is the cost of 1 unit of cloth and a computer in Here? Round your answers below to 2 decimal places. 1 cloth computers. 1 computer units of cloth. b. What is the cost of 1 unit of cloth and a computer in There? Round your answers below to 2 decimal places. 1 cloth = computers. 1 computer = units of cloth. c. In which product does each country have a comparative advantage? Here: (Click to select) v There: (Click to select) v. d. What is the range of feasible terms of trade between the two countries? Round your answers below to 2 decimal places. Feasible terms of trade computers to between 1 unit of cloth to units of cloth. between 1 computer 8 of 33 Next > < Prev
Suppose a pizza parlor has the following production costs: $3.00 in labor per pizza, $2.00 in ingredients per pizza, $0.30 in electricity per pizza, $4,000 in restaurant rent per month, and $400 in insurance per month. Assume the pizza parlor produces 8,000 pizzas per month. What is the variable cost of production (per month)? The variable cost of production is $ (Enter your response as an integer.)
Sandra and Trey operate a small company that produces souvenir footballs. Their fixed cost is $2,000 per month. Each worker costs $1,000 per month. Their monthly production function for footballs is as given in the accompanying table. Quantity of labor (workers) 2. a. 0 2 3 Quantity of footballs 5 0 300 800 1,200 1,400 1,500 :) For each quantity of labor, calculate average variable cost (AVC), average fixed cost (AFC), average total cost (ATC), and marginal cost (MC). b.) On one diagram, draw the AVC, ATC, and MC curves.
The following table gives you information on the total cost of Mac’s ice cream production: b. Compute the average total cost at each level of output. c. Compute the marginal cost at each level of output. d. At which level of output does the average total cost start increasing? Explain the increasing average total cost and its relationship with the marginal cost.

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