Assume 1.5 tons of input (i.e., rough lumber) is required to produce 1 ton of custom cabinetry. Additionally, assume the ton-mile freight rate for finished cabinetry is $0.5 whereas the ton-mile freight rate for rough lumber is $0.25. • Is cabinet mfg. weight losing or weight gaining? Briefly explain. • What explains the relatively high ton-mile shipping cost for finished cabinets? • Should a cabinet manufacturer locate next to its inputs or market? Explain with the aid of a diagram depicting procurement, distribution costs, and total transportation costs.

How does fixed cost affect marginal cost? Why is this relationship important?

Would you consider an interest payment on a loan to a film an explicit or implicit cost?

Are there fixed costs in the lung-run? Explain briefly.

Average cost curves (except for avenge fixed cost) tend to be U-shaped, decreasing and then increasing. Marginal cost curves have the same shape, though this may be harder to see since most of the marginal cost curve is increasing. Why do you think that average and marginal cost curves have the same general shape?

In choosing a production technology, how will firms react if one input becomes relatively more expensive?

How would an improvement in technology, like the high-efficiency gas turbines or Pirelli tire plant, affect me lung-nm average cost curve of a firm? Can you draw the old curve and the new one on the same axes? How might such an improvement affect other firms in the industry?

What shapes would you generally expect each of the following cost curves to have: fixed costs, variable costs, marginal costs, average total costs, and average variable costs?

How do we calculate each of the following: marginal cost, average total cost, and average variable cost?

What is die difference between accounting and economic profit?