A firm has a fixed cost of $20,000 in its first year of operation. When the firm produces 1,000 units of output, its total costs are $80,000. When it produces 1,100 units of output, its variable costs are $70,000. If the marginal cost of each of the 100 additional units of output is the same then the marginal cost of producing the 1,050th unit of output is less than $90.

True

false

The average variable cost curve and average total cost curve will eventually intersect as output increases because average fixed cost eventually becomes negative.

True

False

If marginal cost is rising, then it is likely that marginal product is decreasing because the additional input costs are spread over fewer units of output.

True

False

1. Derived demand refers to a demand connected to the final product’s

______________.

A. production cost

B. demand

C. production

D. design

2. The increase in output stemming from a one-unit increase in an input is referred to as marginal _________.

A. cost

B. revenue

C. physical product

D. physical input

3. Total output will increase until which of the following occurs?

A. Marginal cost is equal to marginal revenue.

B. Marginal cost is minimized.

C. Marginal physical product is equal to zero.

D. Marginal physical product is less than zero

4. As more inputs are added to fixed inputs, the result is described by the law of diminishing ______________.

A. returns

B. marginal costs

C. marginal inputs

D. marginal revenues

A firm’s total cost function is given by TC = 3Q^2 + 48. What are the firm’s fixed cost, variable cost, average fixed cost, average variable cost, and marginal cost functions? Provide a thorough and detailed sketch of the MC, AFC, AVC curves, as well as the average total cost (AC) curve, all in one graph. Find the point where AC is the lowest, show it in the graph.

A company sells 100 computers for $300 each on account to a customer. The computer cost the company $125 each. The company recorded the revenue and cost of goods sold. The company allows customers a right of return which they estimate to be 2% of sales. Using the Financial Statement effects template, how should the company record the estimated returns?

A company shipped 6,000,000 pounds of goods to customers at a cost of $3,000,000. Total revenue is $40 million. If an individual customer orders 10,000 pounds, calculate the amount of shipping cost assigned to the customer using activity-based costing.

1. What is the journal entry to record depreciation for a tractor that originally cost $100,000, has no salvage value, and a useful life of 5 years? Does the entry to record depreciation on the tractor affect net income?

2. What is the book value of the tractor after year 1 of depreciation? How did you calculate it? What is the book value of the tractor after 5 years of depreciation? What does this mean?

3. During the closing process, certain accounts are closed, and others are never closed. These are called temporary and permanent account, respectively. Explain which of the following are temporary and which are permanent accounts.

Depreciation Expense

Accumulated Depreciation

Gain

Loss

4. What is the normal balance and on which financial statement are the following recorded:

Gain

Loss

5. What is the journal entry to sell a tractor for $75,000 with an original cost of $100,000. It's Accumulated depreciation at the time of sell is $50,000. Be sure to calculate the gain or loss. Remember gains have a credit balance and losses have a debit balance!

6. When using the double declining method of depreciation, depreciation each year would

Increase

Decrease

7. Depreciation expense is found on which financial statement?

Income Statement

Balance Sheet

8. Each period, a company records depreciation with the following entry:

Debit Depreciation expense; Credit Accumulated Depreciation

Debit Accumulated Depreciation; Credit Depreciation Expense

Debit Truck; Credit Cash

Debit Cash; Credit Truck

9. The initial journal entry to purchase a truck would be

Debit Depreciation Expense; Credit Cash

Debit Cash; Credit Truck

Debit Truck; Credit Cash

Debit Accumulated Depreciation; Credit Cash

Is a monopoly with the following cost curve facing the following demand curve a natural monopoly?

P(Q)=100-5Q
C(Q) = 8,000 + 10 Q²

A.Yes

B. No

C. Cannot be determined from the information provided

Rouxdy Co. purchased a building that cost $450,000. They paid 10% and signed a 15 – year, 6%, mortgage payable for the remainder.

a. Journalize the issuance of the mortgage payable

b. Journalize the first monthly payment of $3,417.62

For an auto insurance company, the average cost of collision claims is $500 per year for careful drivers and $3000 per year for poor drivers. The drivers are risk neutral and know whether they are careful or poor, but the insurance company only knows that 15% of drivers are poor. What is the insurance company's breakeven price for the collision insurance? A. $425 per year B. $450 per year C. $875 per year D. $2,625 per year

Jared is considering buying boat insurance. His annual income is ? = 100, and the cost to replace his boat in the event that he crashes it is ? = 36. Jared’s utility function over his own wealth is ?(?) = √?. Jared’s subjective estimate of the probability that he crashes his boat this year is ? ? = 0.05. What is the maximum amount that Jared would be willing to pay for boat insurance for the year? Assume the insurance company covers the entire cost of replacing the boat. (Hint: consider Jared’s wealth and his expected utility of that wealth in the case with and without insurance, and find the point where he’s indifferent.)