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##### FIU ECO2023 Assignment HW06 - Chapters 11|12

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Question;1.;award:2.12 out of;2.12 points;Question and Exercise 11-1;What costs and revenues do economists include when calculating profit;that accountants don?t include? Give an example of each.;2.;award:1.42 out of;2.12 points;Question and Exercise 11-2 (algo);Peggy-Sue?s cookies;are the best in the world, or so I hear. She has been offered a job by Cookie;Monster, Inc., to come to work at $75,000 per year. Currently, she is producing;her own cookies, and she has revenues of $250,000 per year. Her costs are;$20,000 for labor, $25,000 for rent, $40,000 for ingredients, and $6,000 for;utilities. She has $150,000 of her own money invested in the operation, which;if she leaves, can be sold for $30,000 that she can invest at 20 percent per;year.;a. Calculate her accounting and economic profits.Instructions: Round your;answers to the nearest whole dollar and use a (-) if the number is negative.;Accounting profit is $.;Economic profit is $.;b. Advise her as to what she should do.;As an economist, I would advise Peggy-Sue to;decline the job at Cookie Monster Inc. because she is currently earning an;economic profit.;$;3.;award:2.12 out of;2.12 points;Question and Exercise 11-3 (algo);Economan has been infected by the free enterprise bug. He sets up a firm;on extraterrestrial affairs. The rent of the building is $4,000, the cost of;the two secretaries is $40,000, and the cost of electricity and gas comes to;$5,000. There?s a great demand for his information, and his total revenue;amounts to $100,000. By working in the firm, though, Economan forfeits the;$50,000 he could earn by working for the Friendly Space Agency and the $4,000;he could have earned as interest had he saved his funds instead of putting them;in this business.;a. What is his profit or loss by an accountant?s definitions?Instructions: Round your;answer to the nearest whole dollar and use a (-) if the number is negative.;Accounting profit is.;b. What is his profit or loss by an economist?s definitions?Instructions: Round your;answer to the nearest whole dollar and use a (-) if the number is negative.;Economic profit is $.;Worksheet;Learning Objective: 11-01 Explain the role of the firm in economic;analysis.;227;Question and Exercise 11-3 (algo);Section: The Role of the Firm;4.;award:2.12 out of;2.12 points;Question and Exercise 11-4;What distinguishes the short run from the long run?Question and Exercise 11-4;Section: The Production Process;5.;award:2.12 out of;2.12 points;Question and Exercise 11-5;What is the difference between marginal product and average product?;6.;award:2.12 out of;2.12 points;Question and Exercise 11-7 (algo);Find TC, MC;AFC, AVC, and ATC from the following table.Instructions: Round your;answers to two decimal places.;Units (Q);FC ($);VC ($);TC ($);MC ($);AFC ($);AVC ($);ATC ($);0;200.00;0;?;?;?;?;1;200.00;100.00;2;200.00;150.00;3;200.00;175.00;4;200.00;250.00;5;200.00;400.00;(Note: Marginal costs should be interpreted as between levels of;output.);7.;award:2.12 out of;2.12 points;Question and Exercise 11-8;For each of the following indicate what costs are being calculated;a. FC + VC =;b. TC/Q =;c. FC/Q =.;d. VC/Q =;e. AFC + AVC =;8.;award:2.12 out of;2.12 points;Question and Exercise 11-12 (algo);Given the following;table;a. What is marginal product and average product at each level of production?Instructions: Round your;answers to the nearest whole number and use a (-) if the number is negative.;Number of Workers;Total;Output;Marginal Product;Average Product;0;0;?;?;1;60;2;180;3;450;4;780;5;1050;6;1260;7;1365;8;1320;9;1200;10;1020;Part b not included in this question.;c. Increasing marginal productivity starts with the first worker.;Diminishing marginal productivity starts with the fifth;worker.;Diminishing absolute productivity starts with the;eighth worker.E;9.;award:2.12 out of;2.12 points;Question and Exercise 11-14;If marginal cost is increasing, what do we know about average cost?;10.;award:2.12 out of;2.12 points;Question and Exercise 11-15;A firm has fixed;costs of $100 and variable costs of the following;a. Show FC, TC, MC, AFC, AVC, and ATC in;a table.Instructions: Round your;answers to the nearest whole number.;Units (Q);FC ($);VC ($);TC ($);MC ($);AFC ($);AVC ($);ATC ($);0;0;?;?;?;?;1;35;2;75;3;110;4;140;5;175;6;215;7;260;8;315;9;390;Part b. not included with this question;c. Explain the relationship between the MC curve and the AVC and ATC curves.;The marginal cost curve intersects the AVC curve at the minimum of the AVC;curve. This is to the left of the intersection of the MC curve and the ATC;curve, which is at the minimum of the ATC curve.;d. Say fixed costs dropped to $50. Which curves shifted? Why?;Average fixed cost and average total cost will shift because fixed costs are a;component of these two costs.;rev: 07_27_2013_QC_33121;1.;award:1.31 out of;2.12 points;Question and Exercise 11-17;An economic;consultant is presented with the following total product table and asked to;derive a table for average variable costs. The price of labor is $15 per hour;and there are no fixed costs.;a. Help him do so.Instructions: Round your;answers to one decimal place and use a (-) if there is a negative number.;Labor;Total Product (Total Output);Marginal;Product;Average;Product;0;0;?;?;1;5;2;15;3;30;4;36;5;40;TP;VC;TC;MC;AVC;0;?;?;5;15;30;36;40;b. Show that the graph of the average productivity curve and average variable;cost curve are mirror images of each other.;c. Show the marginal productivity curve for labor inputs between 1 and 5.;d. Show that the marginal productivity curve and marginal cost curve are mirror;images of each other.Instructions: Use the tools;AVC' and 'AP' to graph the average variable cost and average productivity;curves. Each curve will have 5 points. Then use the tools 'MC' and 'MP' to;graph the marginal cost and marginal productivity curves. Each curve will have;5 points. Round to the nearest $0.25.;rev: 07_27_2013_QC_33121;12.;award:0 out of;2.12 points;Question and Exercise 11-18;Say that a firm has;fixed costs of $100 and constant average variable costs of $25.;a. Show MC, AFC, AVC, and ATC in a table.Instructions: Round your;answers to the nearest whole number.;Units (Q);FC ($);VC ($);TC ($);MC ($);AFC ($);AVC ($);ATC ($);0;100;0;?;?;?;?;1;100;25;25;2;100;50;25;3;100;75;25;4;100;100;25;5;100;125;25;6;100;150;25;7;100;175;25;8;100;200;25;9;100;225;25;b. Instructions: Use the tools;MC,' 'AFC,' 'AVC,' and 'ATC' to draw each of the curves. Round to the nearest;$5.00. There will be 9 points per curve.;c. Explain why the curves have the shapes they do.;d. What law is not operative for this firm?;rev: 07_27_2013_QC_33121;a. Total cost.;d. The law of diminishing marginal productivity is not operative.;13.;award:0 out of;2.12 points;Question and Exercise 11-19;Say a firm has $100;in fixed costs and average variable costs increase by $5 for each unit, so that;the cost of 1 is $25, the cost of 2 is $30, the cost of 3 is $35, and so on.;a. Show VC, TC, MC, AFC, AVC, and ATC in;a table.Instructions: Round your;answers to the nearest whole number.;Units (Q);FC ($);VC ($);TC ($);MC ($);AFC ($);AVC ($);ATC ($);0;100;?;?;?;?;1;100;25;2;100;30;3;100;35;4;100;40;5;100;45;6;100;50;7;100;55;8;100;60;9;100;65;b. Graph the MC, AFC, AVC, and ATC curves;associated with these costs.Instructions: Use the tools;MC,' 'AFC,' 'AVC,' and 'ATC' to draw each of the curves. Round to the nearest;$5.00. There will be 9 points per curve.;4.;award;2.12 out of;2.12 points;MC Qu. 112 An;isoquant is a curve that represents combination...;An isoquant is a;curve that represents combinations of;factors of production;that cost the same amount.;output that can be;produced from the same quantity of inputs.;output that can be;produced at the same cost.;As a firm moves along;an isoquant, it is changing its input combination but keeping output constant.;Multiple Choice Difficulty: 1 Easy Section: Isocost and Isoquants;MC Qu. 112 An;isoquant is a curve that represents combination...;5.;award:2.12 out of;2.12 points;MC Qu. 113 Isoquants slope downward because;Isoquants slope downward because;average total costs decline.;as less of one input is used, more of another must be used if output;is to remain constant.;as less of one input is used, more of another must be used if costs;are to remain constant.;the marginal rate of substitution increases.;Output will decline if the use of one input is reduced while the use of;other inputs is held constant.;Multiple Choice;Difficulty: 2 Medium;Section: Isocost and Isoquants;MC Qu. 113 Isoquants slope downw;16.;award:2.12 out of;2.12 points;MC Qu. 114 The marginal rate of substitution is the rate at w...;The marginal rate of substitution is the rate at which;inputs must be substituted for one another to keep costs constant.;inputs are substituted for output.;inputs must be substituted for one another to keep output constant.;the marginal productivity of a factor declines.;The marginal rate of substitution is the absolute value of the slope of;the isoquant.;Multiple Choice;Difficulty: 2 Medium;Section: Isocost and Isoquants;MC Qu. 114 The marginal rate of substitution is the rate at w...;17.;award:2.12 out of;2.12 points;MC Qu. 115 As you move down an isoquant;As you move down an isoquant;more of all inputs must be used to keep output constant.;production remains technically efficient.;production remains economically efficient.;the marginal rate of substitution does not change.;Each point on an isoquant represents a technically efficient input;combination because the same output is being produced but never from a larger;amount of all the inputs.;Multiple Choice;Difficulty: 3 Hard;Section: Isocost and Isoquants;MC Qu. 115 As you move down an isoquant;Learning Objective: 12-A;18.;award:2.12 out of;2.12 points;MC Qu. 116 An isocost line is a line that represents combinat...;An isocost line is a line that represents combinations of;factors of production that produce equal amounts of output.;factors of production that cost the same amount.;output that can be produced from the same quantity of inputs.;output that can be produced at the same cost.;The position of each isocost line reflects input prices and total costs.;Multiple Choice;Difficulty: 1 Easy;Section: Isocost and Isoquants;MC Qu. 116 An isocost line is a line that represents combinat...;Learning Objective: 12-A;19.;award:2.12 out of;2.12 points;MC Qu. 117 If labor costs $10 per unit and machines rent for...;If labor costs $10 per unit and machines rent for $20 apiece, a movement;along a given isocost line might imply a substitution of;one unit of labor for one unit of machinery.;one unit of labor for two units of machinery.;one unit of machinery for two units of labor.;two units of machinery for three units of labor.;Such a substitution would keep total costs constant.;Multiple Choice;Difficulty: 2 Medium;Section: Isocost and Isoquants;MC Qu. 117 If labor costs $10 per unit and machines rent for...;Learning Objective: 12-A;20.;award:2.12 out of;2.12 points;MC Qu. 118 Suppose a firm finds that an additional dollar spe...;Suppose a firm finds that an additional dollar spent on labor increases;output more than does an additional dollar spent on machines. Under these;conditions, the firm;is technically efficient.;is economically efficient.;should substitute labor for machines if it wants to increase economic;efficiency.;should substitute machines for labor if it wants to increase economic;efficiency.;Since an additional dollar spent on labor adds more to output than does;an additional dollar spent on capital, a firm can reduce the cost of producing;a certain amount of output by using more labor and fewer machines.;Multiple Choice;Difficulty: 3 Hard;Section: Isocost and Isoquants;MC Qu. 118 Suppose a firm finds that an additional dollar spe...;Learning Objective: 12-A;21.;award:2.12 out of;2.12 points;MC Qu. 119 If a firm is operating at the point of tangency be...;If a firm is operating at the point of tangency between an isoquant and;an isocost line, its production is;technically efficient but economically inefficient.;technically inefficient but economically efficient.;both technically and economically efficient.;both technically and economically inefficient.;Since the firm is on an isoquant, it cannot produce the same amount of;output with fewer inputs, and so it is technically efficient. Since any;movement along the isoquant will increase costs without changing output, the;firm is also economically efficient.;Multiple Choice;Difficulty: 3 Hard;Section: Isocost and Isoquants;MC Qu. 119 If a firm is operating at the point of tangency be...;Learning Objective: 12-A;2.;award:2.12 out of;2.12 points;MC Qu. 120 Refer to the graph shown. If labor cos...;Refer to the graph shown. If labor costs $10 per unit and machines cost $15 per;unit, the economically efficient cost of producing 500 units of output is;$100.;$150.;$300.;impossible to determine using the information given.;The input combination at point C costs $150 (where the;isoquant and isocost curves intersect at Q = 500).;Multiple Choice;Difficulty: 1 Easy;Section: Isocost and Isoquants;MC Qu. 120 Refer to the graph shown. If labor cos...;Learning Objective: 12-A;23.;award:2.12 out of;2.12 points;MC Qu. 121 Refer to the graph shown. If labor cos...;Refer to the graph shown. If labor costs $10 per unit and machines cost $15 per;unit, the economically efficient cost of producing 1,000 units of output is;$100.;$150.;$300.;impossible to determine using the information given.;The input combination at point B (where the isoquant;and isocost curves intersect at Q = 1,000) costs $300.;Multiple Choice;Difficulty: 1 Easy;Section: Isocost and Isoquants;MC Qu. 121 Refer to the graph shown. If labor cos...;Learning Objective: 12-A;24.;award:2.12 out of;2.12 points;MC Qu. 122 Refer to the graph shown. A firm can p...;Refer to the graph shown. A firm can produce the same amount of output at;points;A and B.;E and C.;B and C.;A and C.;Since points A and C are on the same;isoquant curve, they are associated with the same level of output.;Multiple Choice;Difficulty: 3 Hard;Section: Isocost and Isoquants;MC Qu. 122 Refer to the graph shown. A firm can p...;Learning Objective: 12-A;25.;award:2.12 out of;2.12 points;MC Qu. 123 Refer to the graph shown. The cost of...;Refer to the graph shown. The cost of 5 units of labor and 6 2/3 units of;machines is the same as the cost of;7.5 units of labor and 5 units of machines.;10 units of labor and 10 units of machines.;5 units of labor and 10 units of machines.;15 units of labor and 2 units of machines.;Point E is on the same isocost line as point C;and so their total costs must be the same. The other combinations are not on;the same isocost line.;Multiple Choice;Difficulty: 3 Hard;Section: Isocost and Isoquants;MC Qu. 123 Refer to the graph shown. The cost of...;Learning Objective: 12-A;26.;award:2.12 out of;2.12 points;MC Qu. 124 Refer to the graph shown. The most eco...;Refer to the graph shown. The most economically efficient way to produce 500;units of output is to use;5 units of machines and 7.5 units of labor.;6 and 2/3 units of machines and 5 units of labor.;10 units of machines and 15 units of labor.;5 units of machines and 25 units of labor.;The isoquant associated with 500 units of output is tangent to an;isocost line at this input combination.;27.;award:2.12 out of;2.12 points;MC Qu. 125 Refer to the graph shown. The most eco...;Refer to the graph shown. The most economically efficient way to produce 1,000;units of output is to use;5 units of machines and 7.5 units of labor.;6 and 2/3 units of machines and 5 units of labor.;10 units of machines and 15 units of labor.;5 units of machines and 25 units of labor.;The isoquant associated with 1,000 units of output is tangent to an;isocost line at this input combination.;Multiple Choice;Difficulty: 2 Medium;Section: Isocost and Isoquants;MC Qu. 125 Refer to the graph shown. The most eco...;Learning Objective: 12-A;28.;award:2.12 out of;2.12 points;MC Qu. 126 Refer to the graph shown. The marginal...;Refer to the graph shown. The marginal rate of substitution at point C is;2/3.;1.;1.5.;impossible to determine with the information given.;The absolute value of the slope of the isoquant at p;29.;award:2.12 out of;2.12 points;MC Qu. 127 Refer to the graph shown. The marginal...;Refer to the graph shown. The marginal rate of substitution at point B is;the same as the marginal rate of substitution at point A.;the same as the marginal rate of substitution at point C.;the same as the marginal rate of substitution at point D.;impossible to determine with the information given.;The absolute value of the slope of the isoquant at point C is;the same as the absolute value of the slope of the isocost line. The two;isocost lines are parallel, and so they have the same slope.;Multiple Choice;Difficulty: 3 Hard;Section: Isocost and Isoquants;MC Qu. 127 Refer to the graph shown. The marginal...;Learning Objective: 12-A;30.;award:2.12 out of;2.12 points;MC Qu. 128 Refer to the graph shown. If the firm...;Refer to the graph shown. If the firm wishes to double output from 500 to;1,000;average total costs will fall.;average total costs will remain the same.;average total costs will rise.;it is impossible to determine what will happen to average total costs.;Since both inputs exactly double, total costs will double. If both total;costs and output double, average total cost is constant.;Multiple Choice;Difficulty: 3 Hard;Section: Isocost and Isoquants;MC Qu. 128 Refer to the graph shown. If the firm...;Learning Objective: 12-A;31.;award:2.12 out of;2.12 points;MC Qu. 129 Refer to the graph shown. The least-co...;Refer to the graph shown. The least-cost method of producing 1,000 units of;output is shown at point;A.;B.;C.;D.;The least-cost method of production is where the isoquant for Q =;1,000 is tangent to an isocost line.;Multiple Choice;Difficulty: 1 Easy;Section: Isocost and Isoquants;MC Qu. 129 Refer to the graph shown. The least-co...;Learning Objective: 12-A;32.;award:2.12 out of;2.12 points;MC Qu. 130 Refer to the graph shown. The cheapest...;Refer to the graph shown. The cheapest way to produce 1,000 units of output is;with;12 units of capital and no workers.;5 workers and no capital.;2 workers and 7.2 units of capital.;4 workers and 2.4 units of capital.;The least-cost input combination for 1,000 units of output is at point D;where the isocost curve and the isoquant are tangent.;Multiple Choice;Difficulty: 2 Medium;Section: Isocost and Isoquants;MC Qu. 130 Refer to the graph shown. The cheapest...;Learning Objective: 12-A;33.;award:2.12 out of;2.12 points;MC Qu. 131 Refer to the graph shown. If the firm'...;Refer to the graph shown. If the firm's total cost is $375, labor must cost;$62.50 per unit.;$75 per unit.;$5 per unit.;$6 per unit.;The position of the isocost indicates that if the firm spends the entire;$375 on labor, it can afford 5 units of labor. Divide 375 by 5 to find the;per-unit cost of labor: $375/5 = $75. Recall that all combinations on the;isocost line have the same total cost.;Multiple Choice;Difficulty: 3 Hard;Section: Isocost and Isoquants;MC Qu. 131 Refer to the graph shown. If the firm'...;Learning Objective: 12-A;34.;award:2.12 out of;2.12 points;MC Qu. 132 Refer to the graph shown. If the firm'...;Refer to the graph shown. If the firm's total cost is $375, capital must cost;$31.25 per unit.;$37.50 per unit.;$2.50 per unit.;$3 per unit.;The position of the isocost indicates that if the firm spends the entire;$375 on capital, it can afford 12 units of capital. Divide 375 by 12 to find;the per-unit cost of capital of $31.25. Recall that all combinations on the;isocost line have the same total cost.;Multiple Choice;Difficulty: 2 Medium;Section: Isocost and Isoquants;MC Qu. 132 Refer to the graph shown. If the firm'...;Learning Objective: 12-A;35.;award:2.12 out of;2.12 points;Question and Exercise 12-1;What is the difference between technical efficiency and economic;efficiency?;36.;award:1.06 out of;2.12 points;Question and Exercise 12-2 (algo);One farmer can grow 3,500 bushels of corn on 3 acres of land with 400;hours of labor and 20 pounds of seed. Another farmer can grow 3,500 bushels of;corn on 3 acres of similar land with 300 hours of labor and 15 pounds of seed.;a. Could both methods be technically efficient?;b. Is it possible that both of these production processes are economically;efficient?;37.;award:2.12 out of;2.12 points;Question and Exercise 12-4;A student has just written on an exam that, in the long run, fixed cost;will make the average total cost curve slope downward. Why will the professor;mark it incorrect?;38.;award:2.12 out of;2.12 points;Question and Exercise 12-7;The following graph;is a typical long-run average total cost curve.;Economies of scale exist for quantities between;0-30.;Constant returns to scale exist for quantities between;30-60.;Diseconomies of scale exist for quantities between;60-100.;The minimum efficient level of production is 30.;a. Why does it slope downward initially?;b. Why does it eventually slope upward?;c. How would your answers to a and b differ;if you had drawn a short-run cost curve?;d. How large is the fixed-cost component of the long-run cost curve?;e. If there were constant returns to scale everywhere, what would the long-run;cost curve look like?;40.;award:2.12 out of;2.12 points;Question and Exercise 12-9;Why are long-run costs always less than or equal to short-run costs?;41.;award:2.12 out of;2.12 points;Question and Exercise 12-11;Where along the long-run average total cost curve will an efficient firm;try to produce in the long run?;42.;award:2.12 out of;2.12 points;Cost Minimizing 12.1;Suppose a firm?s production function is given by Y = 12 K L ? L2;where K is the amount of capital the firm uses in the production process and L;is the number of laborers the firm employs. The respective marginal;products of labor and capital are, MPL = 12 K ? 2 L and MPK = 12;L. The rental rate of capital the firm pays is $45 per unit, while the wage;rate is $15 per laborer.;If the firm is to produces 500 units of output, what is the;cost-minimizing quantity of labor the firm should hire? (Enter your answer;as an integer);Fill in the Blank;Cost Minimizing 12.1;Chapter 12 Appendix;3.;award:2.12 out of;2.12 points;Cost Minimizing 12.2;Suppose a firm?s production function is given by Y = 12 K L ? L2;where K is the amount of capital the firm uses in the production process and L;is the number of laborers the firm employs. The respective marginal;products of labor and capital are, MPL = 12 K ? 2 L and MPK = 12;L. The rental rate of capital the firm pays is $45 per unit, while the;wage rate is $15 per laborer.;If the firm is to produces 500 units of output, what is the cost-minimizing;quantity of capital the firm should purchase? (Enter your answer as an;integer);Fill in the Blank;Cost Minimizing 12.2;Chapter 12 Appendix;44.;award:2.12 out of;2.12 points;Cost Minimizing 12.3;Suppose a firm?s production function is given by Y = 12 K L ? L2;where K is the amount of capital the firm uses in the production process and L;is the number of laborers the firm employs. The respective marginal;products of labor and capital are, MPL = 12 K ? 2 L and MPK = 12;L. The rental rate of capital the firm pays is $45 per unit, while the;wage rate is $15 per laborer.;If the firm is to produces 500 units of output, what is the minimum cost;the firm will incur? (Enter your answer as an integer.);Fill in the Blank;Cost Minimizing 12.3;Chapter 12 Appendix;45.;award:0 out of;2.12 points;Cost Minimizing 12.4;Suppose a firm?s production function is given by Y = 100 K0.5 L0.5;where K is the amount of capital the firm uses in the production process and L;is the number of laborers the firm employs. The respective marginal;products of labor and capital are, MPL = 50 K0.5 L-0.5;and MPK =50 K-0.5 L0.5. The rental rate;of capital the firm pays is $20 per unit, while the wage rate is $5 per;laborer.;If the firm is to produces 1800 units of output, what is the;cost-minimizing quantity of capital the firm should purchase? (Enter your;answer as an integer);9;Fill in the Blank;Cost Minimizing 12.4;Chapter 12 Appendix;46.;award:0 out of;2.12 points;Cost Minimizing 12.5;Suppose a firm?s production function is given by Y = 100 K0.5 L0.5;where K is the amount of capital the firm uses in the production process and L;is the number of laborers the firm employs. The respective marginal;products of labor and capital are, MPL = 50 K0.5 L-0.5;and MPK =50 K-0.5 L0.5. The rental rate;of capital the firm pays is $20 per unit, while the wage rate is $5 per;laborer.;If the firm is to produces 1800 units of output, what is the;cost-minimizing quantity of labor the firm should hire? (Enter your answer;as an integer);36;Fill in the Blank;Cost Minimizing 12.5;Chapter 12 Appendix;47.;award:0 out of;2.48 points;Cost Minimizing 12.6;Suppose a firm?s production function is given by Y = 100 K0.5 L0.5;where K is the amount of capital the firm uses in the production process and L;is the number of laborers the firm employs. The respective marginal;products of labor and capital are, MPL = 50 K0.5 L-0.5;and MPK =50 K-0.5 L0.5. The rental rate;of capital the firm pays is $20 per unit, while the wage rate is $5 per;laborer.;If the firm is to produces 1800 units of output, what is the minimum;cost the firm will incur? (Enter your answer as an integer.);360;Fill in the Blank;Cost Minimizing 12.6;Chapter 12 Appendix

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