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    Chapter4 Ass

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    Garp Barroca
    When economists refer to "marginal", they mean incremental. Managers will undertake an investment if the marginal benefits are greater than the marginal costs. A firm produces 500 units per week using 20 full-time workers costing $15 per hour and $10 in raw materials per unit. The factory rent is $2,250 per week, with total variable costs of $5,000, total fixed costs of $14,250, and total costs of $19,250. If marginal cost is constant, the fixed cost can be determined by comparing the change in total costs to the change in output. A manager will compare the incremental benefit of a second factory to the cost of the second factory alone when deciding whether to add another factory

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    Chapter4 Ass

    Uploaded by

    Garp Barroca
    90 views1 page
    When economists refer to "marginal", they mean incremental. Managers will undertake an investment if the marginal benefits are greater than the marginal costs. A firm produces 500 units per week using 20 full-time workers costing $15 per hour and $10 in raw materials per unit. The factory rent is $2,250 per week, with total variable costs of $5,000, total fixed costs of $14,250, and total costs of $19,250. If marginal cost is constant, the fixed cost can be determined by comparing the change in total costs to the change in output. A manager will compare the incremental benefit of a second factory to the cost of the second factory alone when deciding whether to add another factory

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    CHAPTER4-ASS

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    CHAPTER4-ASS

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    When economists refer to "marginal", they mean incremental. Managers will undertake an investment if the marginal benefits are greater than the marginal costs. A firm produces 500 units per week using 20 full-time workers costing $15 per hour and $10 in raw materials per unit. The factory rent is $2,250 per week, with total variable costs of $5,000, total fixed costs of $14,250, and total costs of $19,250. If marginal cost is constant, the fixed cost can be determined by comparing the change in total costs to the change in output. A manager will compare the incremental benefit of a second factory to the cost of the second factory alone when deciding whether to add another factory

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    90 views1 page

    Chapter4 Ass

    Uploaded by

    Garp Barroca
    When economists refer to "marginal", they mean incremental. Managers will undertake an investment if the marginal benefits are greater than the marginal costs. A firm produces 500 units per week using 20 full-time workers costing $15 per hour and $10 in raw materials per unit. The factory rent is $2,250 per week, with total variable costs of $5,000, total fixed costs of $14,250, and total costs of $19,250. If marginal cost is constant, the fixed cost can be determined by comparing the change in total costs to the change in output. A manager will compare the incremental benefit of a second factory to the cost of the second factory alone when deciding whether to add another factory

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 1

    1.

    When economists speak of "marginal" they mean


    a) opportunity
    b) scarcity
    c) incremental
    d) unimportant
    c) incremental
    2. Managers undertake an investment only if
    a) marginal benefits of the investment are greater than zero
    b) marginal costs of the investment are greater than marginal benefits of investment
    c) marginal benefits are greater than marginal costs
    d) investment decisions do not depend on marginal analysis
    3.A firm produces 500 units per week. It hires 20 full-time workers (40 hours per week) at an hourly
    wage of $15. Raw materials are ordered weekly, and they cost $10 for every unit produced. The
    weekly cost of the rent payment for the factory is $2,250. How do the overall costs break down?
    (total variable, total fixed, total cost)
    C.Total VC $5,000
    Total FC $14,250
    Total Cost $19,250
    4.Total costs increase from $1,500 to $1,800 when a firm increases output from 40 to 50 units. If
    marginal cost is constant, what is the fixed cost?
    $300
    (we know this because MC is constant)
    5.A manager of a clothing firm is deciding whether to add another factory in addition to one already
    in production. The manager would compare
    a) the total benefits gained from the two factories to the total costs of running the two factories
    b) the incremental benefit expected from the second factory to the total costs of running the two
    factories
    c) the incremental benefit expected from the second factory to the cost of the second factory
    d) the total benefits gained from the two factories to the incremental costs of running the two
    factories
    6.A firm is thinking of hiring an additional worker to their organization who can increase total
    productivity by 100 units a week. The cost of hiring him is $1500 per week. The price of each unit is
    $12.
    C. The firm Should not hire the worker
    7.A retailer has to pay $9 per hour to hire 13 workers. If the retailer only needs to hire 12 workers, a
    wage rate of $7 per hour is sufficient. What is the marginal cost of the 13th worker?
    $33
    9*13 = 117
    7*12 = 84
    117 - 84 = 33
    8.If a firm's average cost is rising, what does this tell us about marginal cost?
    C.marginal cost is greater than average cost
    9.A company is producing 15,000 units. At this output level, MR is $22 and MC is $18. The firm sells
    each unit for $48 and average total cost is $40. What can we conclude from this information?
    C.The company needs to increase production because MR>MC
    10.Food Fanatics caters meals where their cost of producing an extra meal is $25. Each of their meals
    is standard and sells for $20. At this rate what should the company do?
    a. Produce more meals and increase their profit
    b. Produce fewer meals and increase their profit
    c. Not change production
    d. There is not enough information to make a recommendation

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