IL.d is most often equal to accounting profit. Considering the following Scenari
ID: 1104426 • Letter: I
Question
IL.d is most often equal to accounting profit. Considering the following Scenario John Doh Apple farmer, but he also spends part of his day tutoring and giving private lessons for flying single engine airplane, and he charges for his service $26 per hour. One spring day, he spends pruning and fertilizing his apple. The cost of fertilizer was $160. He expects that the annual sale of his delicious apple will be $1,600. 26. Refer to above scenario, what are the total implicit costs and explicit costs of the day that Farmer spring day in the field planting wheat? a. $130 and $380. b. $130, S200. c. $260, $380 d. $260 and $160. 27. Refer to above scenario, What is John Doh's accounting profit? a. $1600 b. $1440 c. $1180. d. $1080. 28. Refer to above seenario, What is John Doh's economic profit? a. $1600. b. $1470 c. $1180. d. $1080. , the relationship between the quantity of inputs used and quantity of output to be produced is called the production els of wheat when he hires 3 workers. Which of the following possibilities is consistent with the property of 29. For a producer uppose that on a 100-acre farm, its owner is able to produce 2,000 bushels of wheat when he hires 2 workers. He is able to produce 4,400 bushe diminishing marginal product? a. The farmer is able to produce 6,600 bushels of wheat when he hires 4 workers. b. The farmer is able to produce 6,800 bushels of wheat when he hires 4 workers. c. The farmer is able to produce 7,000 bushels of wheat when he hires 4 workers. d. The farmer is able to produce 7,400 bushels of wheat when he hires 4 workers. 30. By definition the total cost of production is the sum of fixed and variable costs. The total cost curve gets steeper as output increases due to diminishing marginal product, and it suggests that a. adding additional workers will lower total cost. b. marginal cost is upward sloping. d. additional units of output become less costly as more output is produced. c. the firm is at full capacity 31. Base on the derivation of marginal costs, why does the marginal cost exhibit a U-shape? b. increasing marginal product. a. diminishing marginal product e, the fact that increasing marginal product follows decreasing marginal product derived from an S-shape production function. d. the fact that decreasing marginal product follows increasing marginal product derived from an S-shape production function. 4 RMUNNICHAExplanation / Answer
26 (d) The implicit cost is the opportunity cost of his labour that is 10*26=260 and the explicit cost is 160 that is the cost on fertilizers.
27 (b) Accounting profit=revenue-explicit cost=1600-160=1440
28 (c) Economic profit=evenue-explicit cost-implict cost=1600-160-260=1180
29 (a) Diminishing marginal product implies that additional output should fall with one unit labour increase. So labour increases from 2 to 3, output increases by 4400-2000=2400. So when the 4th labour is hired then output should increase by less than 2400. This happens when output increases to 6600.
30 (b) With diminishing marginal product, the addition to total output is decreasing as we increase input. This implies that the marginal cost is increasing and so marginal cost curve is upward sloping.
31 (d) Marginal cost is U-shaped because initially there exists increasing marginal product and so marginal cost falls but as diminishing marginal product sets in the marginal cost increases. The production function exhibits increasing marginal product followed by diminishing marginal product.