Suppose that you are a fishing boat owner and that you have purchased a boat for
$75,000 with a 15 year loan for the full amount. What is your fixed cost per year,
ignoring interest payments?
122. Suppose you’re in the trucking business and you purchase a $100,000 truck with a one
year loan for the full amount. Ignoring interest payments, what is your fixed cost per
123. Federal Express has just purchased a cargo plane from Boeing for $5,000,000 with a loan
for the full amount spread over 25 years. Ignoring interest payments, what is the fixed
cost per year?
124. The difference between variable cost and fixed cost is that
a.fixed cost is paid even when there is no output
b.fixed cost is always falling as output increases
c.variable cost only increases for a while and then it decreases
d.fixed cost is always less than variable cost
e.fixed cost is not paid once production begins
125. The term labor productivity refers to the
a.management time required to manage a unit of output
b.maximum number of laborers that a production facility can utilize
c.ratio of workers’ wage rate to the value of the good
d.minimum number of laborers required to produce a good
e.quantity of output per laborer per hour
126. Suppose a fishing boat reaches its most productive use of each person’s talent with 15
crew members. More than 15 workers would cause overcrowding. If there are only 10
crew members currently on the boat, adding one more crew member will
a.require the owner to add another boat
b.increase the level of labor productivity
c.have no effect on labor productivity
d.reduce the need for other variable inputs such as fuel
e.reduce the total variable cost of operating the fishing boat
127. In the description of labor costs associated with fishing, the textbook measures the cost of
labor that corresponds with different quantities of fish. Which of the following statements
a.Labor costs for fish production cannot be estimated.
b.The cost of labor increases at an increasing rate at low levels of output.
c.Labor costs increase at the same rate over all ranges of output.
d.At higher levels of output, the cost of labor increases at an increasing rate.
e.At higher levels of output, the cost of labor decreases at an increasing rate.
128. Which statement about the total variable cost curve is true?
a.It begins at the origin and increases before decreasing again.
b.The total variable cost curve is the same at all levels of output.
c.The total variable cost curve is increasing but at a decreasing rate.
d.It begins at the origin and is always increasing.
e.There is no such thing as a total variable cost curve.
129. If the total variable cost curve for a firm is S-shaped, what is the shape of the total cost
curve for that firm?
e.there is not enough information
130. Barbara owns a small shop where dresses are made. At the end of a given month, she has
250 dresses. Her expenses for the month are $1,000 for rent, $6,000 for wages, $1,500 for
fabric and thread, and $500 for electricity. Her total variable cost for the month is
c.$32 per dress
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