the question. 1D Which of the following is an example of a long run adjustmenta

ID: 1154922 • Letter: T

Question

the question. 1D Which of the following is an example of a long run adjustmenta A) Ford Motor Company lays off 2,000 assembly line workers MULTIPLE CHOICE. Choose the one alternao 1) B) Wal-Mart builds another Supercenter Q A soybean farmer D) Your university offers Saturday morning classes next fall. turns on the irrigation system after a month long dry spell. ' 2) 2) Which of the following is the best example of a short run adjustment? A) A local bakery purchases another commercial oven as part B) Your local Wal-Mart hires two more associates. 0 Toyota builds a new assembly plant in Texas. D) Smith of its capacity expansion. University completed negotiations to acquire a large plece of land to build its new library 3) Which of the following is an implicit cost of production? 3) A) wages paid to labor plus the cost of carrying benefits for workers B) rent that could have been earned on a building owned and used by the firm O interest paid on a loan to a bank D) the utility bill paid to water, electrici ty, and natural gas companies 4) The explicit cost of production is also called A) variable cost. C) direct cost B) overhead cost. D) accounting cost. 5) Jayanthi moves her yoga studio from her home to a space she rents in Oakland, California. Holding everything else constant, as a result of this move, A) her explicit cost falls and her implicit cost rises. B) her opportunity cost rises C) her economic cost rises. D) her implicit cost falls and her explicit cost rises 6) Golda Rush quit her job as a manager for Home Depot to start her own hair dressing salon, Goldilocks. She gave up a salary of $40,000 per year, invested her savings of $30,000 (which was earning 5 percent interest) and borrowed $10,000 from a close friend, agreeing to pay 5 percent interest per year. In her first year, Golda spent $18,000 to rent a salon, hired a part-time assistant for $12,000 and incurred another $15,000 on equipment and hairdressing material. Based on this information, what is the amount of her explicit costs? A) $45,000 B) $45,500 C)$47,000 D) $87,000 7) Vipsana's Gyros House sells gyros. The cost of ingredients (pita, meat, spices, etc.) to make a gyro is $2.00. Vipsana pays her employees $60 per day. She also incurs a fixed cost of $120 per day. Calculate Vipsana's variable cost per day when she produces 50 gyros using two workers? A) $100 B) $124.40 C) $220 D) $240

Explanation / Answer

1) Solution: Wal-Mart builds another Supercenter

Explanation: Firms are able to adjust all costs in the long run,

2) Solution: Your local Wal-Mart hires two more associates

Explanation: Firms can influence prices only through adjustments made to production levels in the short run

3) Solution: Rent that could have been earned on a building owned and used by the firm

Explanation: An implicit cost includes cost that has already occurred

4) Solution: accounting cost

Explanation: Implicit Cost, also known as the economic cost; and explicit cost, also known as the accounting cost

5) Solution: her implicit cost falls and her explicit cost rises

Explanation: With all remaining constant the implcit cost falls while explicit cost increases

6) Solution: $45,500

Working:

Rent

18000

Hire assistant

12,000

Equipment

15000

Interest on borrowings

500

45500

7) Solution: 220

Explanation: (50*2) + (60*2) = 220