Ch+5-2+Supply+Questions

=Ch. 5-2: What are the costs of production? =

After reading Ch. 5-2, answer the following questions: (Some are directly from the book, others require applying the knowledge gained from reading the section to make educated guesses.) 1. Define all of the key terms from the top of p. 138. 2. When can ADDING a new worker cause marginal product to decrease? 3. A farmer has to pay rent for a warehouse in which to store peaches that have just been picked. The farmer has to pay this rent even during the winter, when there are no peaches in the warehouse. Is the rent a fixed cost or a variable cost? Explain. 4. Explain why it is usually worthwhile to keep a movie theater open during the afternoon even though there are far fewer customers than during the evening. Include at least three terms from this section (including both "cost" and "revenue" terms) 5. What is the biggest characteristic of MARGINAL cost and MARGINAL revenue? 6. In which of the following scenarios is a business typically making the most money: (a) when total revenue equals total cost or (b) when marginal cost equals marginal revenue? Why? 7. Answer the following questions based on the chart below:
 * 7a: According to the chart below, the break-even point occurred when the quantity sold was around what number?
 * 7b: At the breakeven point, how much were the total fixed costs for this business?
 * 7c: At the breakeven point, how much were the total variable costs for this business?
 * 7d: At 1300 units sold, which was greater: marginal costs or marginal revenue?