Find the Degree of Operating Leverage and the breakeven quantity.

Answer: DOL= Q(P-AVC)/Q(P-AVC)-TFC,

Distinguish between short-run and long-run production decisions and illustrate their impact on costs and economies of scale.

Short Run Production system

Period of time where some factors of production (inputs) are fixed, and constrain a manager's decisions.

Explain the difference between and the economic relevance of fixed costs, sunk costs, variable costs, and marginal costs.

Answer: Sunk Cost: are those costs that are forever lost after they have been paid. Variable Cost: costs that change as output changes. Marginal Costs: Cost of one more output

Explain the difference between and the economic relevance of fixed costs, sunk costs, variable costs, and marginal costs.

Answer: Sunk Cost: are those costs that are forever lost after they have been paid. Variable Cost: costs that change as output changes.

Calculate a cost function from a production function and explain how economic costs differ from accounting costs.
For the cost function C(Q) = 629.0 + 22.0Q + 10.0Q2, the marginal cost of producing 4.0 units of output is:

A. 22

B. 100

C. 102

D. 62

Economic accounts for implicit costs while accounting doesnt.

Calculate input demand and the cost-minimizing combination of inputs and use isoquant analysis to illustrate optimal input substitution.

Answer: Isoquants

combinations of inputs that yield the same output in the long run, when all inputs are variable.

Marginal product (MP) - The change in total product (output) attributable to the last unit of an input.

-Marginal product of labor: MPL = ∆ Quantity/ ∆Labor

-Marginal product of capital: MPK = ∆Quantity/ ∆Capital