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[answered] A firm purchased copper pipes a few years ago at $9 per pip


Please help me with these couple multiple choice. It would be very helpful for my overall assignment. Please do not ask me to send you an email outside of Course Hero or try to get me to use a service outside of Course Hero. This has been happening more and more :( Thank you in advance for your help! Alex


A firm purchased copper pipes a few years ago at $9 per pipe and stored them, using them only as the

 

need arises. The firm could sell its remaining pipes in the market at the current price of $2.

 

What is the opportunity cost of each pipe and what is the sunk cost?

 

The opportunity cost is $_____ and the sunk cost is $_____.

 

(Enter your response as a whole number.) If the average cost of producing a good is increasing as a firm produces more of the

 

good, then which of the following must be TRUE?

 

A.

 

AFC is falling.

 

B.

 

MC?AVC.

 

C.

 

AVC is rising.

 

D.

 

All of the above A bottling company uses two inputs to produce bottles of the soft drink Sludge: bottling

 

machines (K) and workers (L). The isoquants have the usual smooth shape. The machines

 

cost $1,000 per day to run (r), and the workers earn $200 per day (w). At the current level of

 

production, the marginal product of machines (MPK) is an additional 496 bottles per day, and

 

the marginal product of labor (MPL) is 20 more bottles per day. Is this firm producing at

 

minimum cost? If it is minimizing cost, explain why. If it is not minimizing cost, explain how the

 

firm should change the ratio of inputs it uses to lower its cost.

 

The bottling company

 

A.

 

is not minimizing the cost of production because MPK/r > MPL/w and should use less labor and

 

more machines.

 

B.

 

is not minimizing the cost of production because MPK/r < MPL/w and should use more labor

 

and fewer machines.

 

C.

 

is not minimizing the cost of production because MPK/r > MPL/w and should use more labor

 

and fewer machines.

 

D. is minimizing the cost of production because MPK/r = MPL/w.

 

E.

 

is not minimizing the cost of production because MPK/MPL = r/w and should use more labor

 

and fewer machines. In the long run, fixed costs are

 

A.

 

sunk.

 

B.

 

larger than in the short run.

 

C.

 

avoidable.

 

D.

 

not included in production decisions. In what types of industries would you expect to see substantial learning by doing???

 

You would expect to see the strongest effect of "learning by doing" in industries

 

A.

 

with stable technologies.

 

B.

 

benefiting from increasing returns to scale.

 

C.

 

without economies of scope.

 

D.

 

producing new products.

 

E.

 

that are capital-intensive. Travel websites such as Travelocity tend to offer reservation services for multiple travel modes.

 

This is because

 

A.

 

once the firm has the reservation technology for airlines, there are economies of scope in

 

offering the same service for railroads.

 

B.

 

once the firm has the reservation technology for airlines, there are economies of scale in offering the same service for railroads.

 

C.

 

the firms have contractual obligations to offer reservations for airlines and railroads, for

 

example.

 

D.

 

the firms have statutorial obligations to offer reservations for airlines and railroads, for example. Limited liability is a benefit available only to

 

A.

 

partnerships.

 

B.

 

corporations.

 

C.

 

sole proprietorships.

 

D.

 

All of the above.

 


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