Technology, Production, And Costs Practice Problems Microeconomics Worksheet Page 10

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Key
1. A
14. C
27. C
2. A
15. C
28. D
3. D
16. B
29. C
4. C
17. C
30. C
5. B
18. B
31. B
6. C
19. A
32. C
7. C
20. C
33. B
8. B
21. C
34. B
9. See below
22. D
35. B
10. B
23. B
36. D
11. B
24. C
37. A
12. D
25. B
38. B
13. D
26. D
9.a. $121,000 = 40,000 (labor) + 15,000 (materials) + 5,000 (equipment)+ 10,000 (opportunity
cost of building) + 1,000 (5% of 20,000, the opportunity cost of her savings) + 50,000
(opportunity cost of Sally's labor)
b. $60,000 = 40,000 (labor) + 15,000 (materials) + 5,000 (equipment)
c. $61,000 = 10,000 (opportunity cost of building) + 1,000 (5% of 20,000, the opportunity cost
of her savings) + 50,000 (opportunity cost of Sally's labor)
d.No. Although she does not incur a monetary cost for her garage space now, it is an
opportunity cost and part of the economic cost of doing business. Sally could just as well rent
her space out now, collect the rent and move closer to town.
39.
Quantity of
Quantity of
foot massages
Fixed
Variable
Total
Average
Marginal
workers
per day
cost
cost
cost
total cost
cost
0
0
$500
$0
$500
---
---
1
10
500
75
575
575
$7.50
2
25
500
150
650
325
5.00
3
45
500
225
725
241.67
3.75
4
60
500
300
800
200
5.00
5
70
500
375
875
175
7.50

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