Question

5.For a firm that produces wooden tables, which of the following costs is a fixed cost in the short run?

(x)the rent that the firm pays for the space that is used to produce the wooden tables.

(y)the cost of the wood that is used in the production of the wooden tables.

(z)the monthly rent that the firm pays for equipment that is used to produce the wooden tables

A.(x), (y) and (z)B. (x) and (y) only C.(x) and (z) only D.(y) and (z) only E.(z) only

For a construction company that builds houses, which of the following costs would be a fixed cost?

(x)the $30,000 per year salary paid to the company's bookkeeper

(y)property taxes on the land that is used as storage for all of the firm’s supplies

(z)the $20 per hour wage paid to a construction supervisor

A.(x), (y) and (z)B. (x) and (y) only C.(x) and (z) onlyD.(y) and (z) onlyE.(x) only

For a firm that produces and sells boats, which of the following costs is a variable cost in the short run?

(x)the rent that the firm pays for office space to house the executive and sales staff.

(y)the cost of the wood, fiberglass and steel that is used in the production of the boats

(z)the payroll that is paid to the production laborers that work on the assembly line.

A.(x), (y) and (z)B. (x) and (y) only C.(x) and (z) onlyD.(y) and (z) onlyE.(x) only

Answer 1

In the short-run, the total cost of production is composed of fixed cost and variable cost. The fixed cost is a one-time cost and is fixed for all the levels of output in the short-run. The variable cost varies with the level of output.

Answer 5. C.(x) and (z)

For a firm that produces wooden tables, the following costs are fixed cost in the short run;

(x) the rent that the firm pays for the space that is used to produce the wooden tables.

(z) the monthly rent that the firm pays for equipment that is used to produce the wooden tables.

The rents that a firm pays for the space used in production is fixed for the short-run. The monthly rent that the firm pays for equipment that is used to produce the wooden tables is fixed for a month. So both of these costs are fixed costs in short-run.

The cost of the wood that is used in the production of the wooden tables, is a variable cost. It depends on the quantity of production, and the price of the wood, which may vary in the short-run.

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Answer: B. (x) and (y)

For a construction company that builds houses, the following costs would be a fixed cost;

(x) the $30,000 per year salary paid to the company's bookkeeper.

(y) property taxes on the land that is used as storage for all of the firm’s supplies.

The $30,000 per year salary is fixed for a year. The cost for property taxes on the land that is used as storage for all of the firm’s supplies is fixed in the short-run. So both of these costs are fixed cost in the short-run.

The $20 per hour wage paid to a construction supervisor is a variable cost.The hourly wage rate may vary, and the total wage payment depends on the number of workers employed.

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Answer: D.(y) and (z) only

For a firm that produces and sells boats, the following costs are variable costs in the short run;

(y) the cost of the wood, fiberglass and steel that is used in the production of the boats.

(z) the payroll that is paid to the production laborers that work on the assembly line.

The demand for the wood, fiberglass and steel that is used in the production of the boats depends on the quantity of production. As a result, the cost on these things varies with production. The payroll that is paid to the production laborers that work on the assembly line, depends on the number of workers, which may vary in the short-run depends on the requirement. So the cost on all these things are variable costs.

The rent that the firm pays for office space to house the executive and sales staff , is fixed in the short-run. So it is a fixed cost.

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