8. (Table: Production Function for Soybeans) The table shows a tion function for

Question

8. (Table: Production Function for Soybeans) The table shows a tion function for soybeans. Assume that the fixed input. produc r, which have a combi cost of $150 per day. The cost of labor is $100 per worker per day. The total cost of producing 25 bushels of soybeans is: A) S50 B) $100 C) $150 D) $250 When a cherry orchard in Oregon adds a worker, the total cost of production increases by $24,000. Adding the worker increases total cherry output by 600 pounds. Therefore, the marginal cost of the last pound of cherries produced is: 9. A. $19. B. $4,000. C. $24,000. D. $40 10. The larger the output, the greater the quantity of output over which effect, this leads fixed cost is spread. Called the to a A) spreading: lower average fixed cost. B) spreading: higher average fixed cost. C) diminishing returns; lower average variable cost. D) diminishing returns; higher average variable cost. 11. Which of the following is true for firms operating under perfect competition? A. There are significant barriers to entry 8. There is a very high fixed cost, which reduces the number of firms in the industry They must accept the market price, regardless of their output level They can earn economic profit in the long run C. D. [Figure #1-Perfectly Competitive Industry

Explanation / Answer

8) If one worker is hired, total cost is $100 + $150 = $250. which is the cost of producing 25 bushels. Hence option D is correct

9) Increase in TC = 24000 and increase in output = 600. This implies marginal cost = 24000/600 = 40. Hence the correct option is D.

10) Option A. Since fixed cost is unchanged, AFC is reduced gradually as output rises

11) Option C.We see that firms in this market have following features

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