-Silvio's Pizza Is a Small Pizzeria

question 299

Multiple Choice

-Silvio's Pizza is a small pizzeria. The firm's production function is shown in the table above. Suppose that Silvio's costs include only the cost of renting ovens, which is $100 per oven per week, the labor cost, $280 per worker per week, and the opportunity cost of Silvio's entrepreneurship, $1,000 per week. With Plant 2, Silvio's average product per worker is highest if ________ workers per week are employed.

• A) 3
• B) 4
• C) 5
• D) 2

Identify the assumptions and criteria necessary for regression analysis in cost estimation.

Distinguish between fixed, variable, and mixed costs in various business contexts.

Identify appropriate cost equations based on regression analysis output.

Understand the process of estimating cost behaviors and the role of cost drivers.

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Definitions:

VMPL

The Value of Marginal Product of Labor, which represents the additional revenue generated by employing one more unit of labor.

Profit

The financial gain realized when the amount of revenue gained exceeds the expenses, costs, and taxes needed to sustain the operation.

Marginal Productivity

The additional output that can be produced by adding one more unit of a specific input, keeping all other inputs constant.

Perfectly Competitive

A type of market where numerous small firms compete against each other offering products that are virtually interchangeable and where no single company can dictate the market price.