At a Given Output Level, If the Cost of Capital

question 57

Multiple Choice

At a given output level, if the cost of capital is $55 per hour, the wage paid to employees is $30 per hour, the marginal product of capital is 110 units per hour, and the marginal product of labor is 60 units per hour, the firm is _______ .

• A)on a short- run average total cost curve, but not the long- run average cost curve
• B)on the long- run average total cost curve, but not a short- run average cost curve
• C)on neither a short- run average total cost curve nor the long- run average cost curve
• D)on both a short- run average total cost curve and the long- run average total curve

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Definitions:

Diseconomies Of Scope

Exist when the cost of producing two products jointly is more than the cost of producing those two products separately.

Economies Of Scope

Cost advantages that a business achieves by producing a wider variety of products, rather than specializing in a single product or service.

Average Costs

The total cost of production divided by the number of units produced, representing the cost per unit of output.

Wine Distribution

The process of transporting wine from the manufacturer to various retail locations or directly to consumers.