Micro Exam 3- Chapter 11
1) Production definition
1) Is the process of turning inputs into outputs
the marginal product of labor 1) The marginal product of an input is the... 2) MPL = 3) MPL = ....
1) additional quantity of output that is produced by using one more unit of that input. 2) ΔQ/ΔL 3) change in quantity of output / by one additional unit of labor
slide 29- The relationship between the ATC and MC curves: (look at PP) 1) If marginal cost is above average total cost... 2) If marginal cost is below average total cost...
1) average total cost is rising. 2) average total cost is falling.
Production in short run 1) Marginal product (of labor) is the... 2) Marginal product initially rises as more workers are hired; 3) Example: Past a certain point, another field worker will be so crowded that his marginal product will be...
1) change in output resulting from a one-unit increase in the amount of labor input (ΔQ/ΔL) 2) then it declines. 3) lower than the last worker's.
1) The marginal cost is the... 2) MC =
1) change in total cost generated by one additional unit of output. 2) ΔTC/ΔQ
1) A variable cost is a cost that... 2) It is the cost of
1) depends on the quantity of output produced. 2) the variable input.
1) Marginal cost is upward sloping because of... 2) Average variable cost also is upward sloping but... 3) Average fixed cost is... 4) The marginal cost curve intersects...
1) diminishing return 2) is flatter than marginal cost curve 3) downward sloping because of spreading effect 4) the average total cost curve from below, crossing it at its lowest point
1) A fixed cost is a cost that... 2) It is the cost of...
1) does not depend on the quantity of output produced. 2) the fixed input
Short run vs long run costs 1) All inputs are variable in the long run. This means that in the long run... 2) The firm will choose its fixed cost in ...
1) fixed cost (like factory size) may also vary 2) the long run based on the level of output it expects to produce
1) The total cost of producing a given quantity of output is the sum of the... 2) The total cost curve becomes ______ as more output is produced 3) a result of...
1) fixed cost and the variable cost of producing that quantity of output 2) steeper 3) diminishing returns
1) Average fixed cost = 2) AFC =
1) fixed cost per unit of output produced 2) Fixed Cost /Quantity (output)
TOTAL PRODUCT, MARGINAL PRODUCT, AND FIXED INPUT (slide 12) 1) Total product curve- With more land (fixed input) each worker can produce ______. This shifts the total product curve ______. More capital = higher production/ output 2) Marginal product curve- So the MPL of each worker is higher when the farm is larger; the ...
1) more, up 2) MPL curve shifts up also.
production function and TP curve: Powerpoint slide #7 1) The relationship between inputs and output is positive but.... 2) Increment that each laborer make becomes smaller and smaller. With each additional laborer,
1) not constant: marginal product of labor changes along the production function. 2) the incremental labor is adding less and less output
TOTAL COST CURVE: 1)The total cost of producing a given quantity of output is the.... 2) TC = 3) The total cost curve becomes steeper as more output is produced... 4) When trying to increase short run production....
1) sum of the fixed cost and the variable cost of producing that quantity of output. 2) FC + VC 3) a result of diminishing returns. 4) total cost increases steeply
1) ac= 2) afc= 3) avc= 4) mc= 5) ac= 6) Fc is ------ (no gonna change no matter what level of output).
1) tc/q 2) fc/q 3) vc/q 4) change in tc/ change in q 5) afc+avc 6) constant
WHY IS THE MARGINAL COST CURVE UPWARD SLOPING? 1) Because there are diminishing returns to inputs in this example. As output increases.... 2) This implies that more and more of the..... 3) And since each unit of the variable input must be paid for...
1) the marginal product of the variable input declines. 2) variable input must be used to produce each additional unit of output 3) the cost per additional unit of output also rises.
Average total cost curve Increasing output has two opposing effects on average total cost: 1) The spreading effect: The larger the output..... 2) leading to.... 3) Prevails at...
1) the more output over which fixed cost is spread, 2) lower average fixed cost. 3) low levels of output
1) The diminishing returns effect: The larger the output... 2) which leads to... 3) Prevails at
1) the more variable input required to produce additional units, 2) higher average variable cost. 3) high levels of output
Costs of Selena's gourmet salsa (slide 17) 1) If you were to produce 2 units of output, total cost is 156. Marginal cost is the difference between _______, which calculates to..... 2) Why is marginal cost increasing? 3) On average each worker has fewer units of capital to work with? If you want to increase output at a constant rate....
1) the total cost of 2 units - total cost of previous unit. (156-120=36) 2) Diminishing returns towards variable input. It's a short run production process. You can't touch fixed, so you can increase variable cost. 3) you're gonna have to bring in more than an incremental increase in variable input (labor)
1) More realistic cost curves -short run 1) increasing specialization leads... 2) ... but diminishing returns set in once the benefits of specialization...
1) to a lower marginal cost 2) are exhausted and marginal cost rises
1) Average total cost (often referred to simply as average cost) = 2) ATC =
1) total cost per unit of output produced 2) Total Cost /Quantity (output)
1) Average variable cost = AVC =
1) variable cost per unit of output produced 2) Variable Cost/Quantity (output)
Total cost curve- slide 15 How short run affects total cost 1) Labor is a... 2) Wheat production is... 3) Capital is... 4) Variable cost is increasing at a rate of 200. Fixed costs are... 5) Even when production is 0, fixed cost is still 400. Why? 6) Each unit of labor costs the same. Therefore, variable cost is... 7) You graph output against total cost. Curve is increasing. Why is total cost increasing? 7A) When output is 0, you still have a positive cost because of the ________. First unit adds about 19 units to output. You hire a second, output goes up to 36. 7B) Cost is increasing at the same rate, but --------. Every additional labor output makes ---------- 7C) Why is it that the cost are constant, but output is not (gets smaller and smaller)?
1) variable cost. 2) variable input 3) fixed input/ Is a fixed cost 4) constant. 5) There's setup costs. 6) increasing at the same rate of 200 7) -- 7A) fixed values 7B) quantity is not, quantity smaller. 7C) Has to do with diminishing returns to labor. You have diminishing returns in the short run.
Powerpoint 22 LBD: Jimmy hires only labor and capital at his service shop. The price of labor is $100 per worker per week, and the price of capital is $10 per unit. The fixed cost of production equals:
B Firstly its short run. FC= 10*10
If one worker makes 14 baskets, two workers make 34 baskets, three workers make 45 baskets, and four workers make 50 baskets, which worker yielded the highest marginal product? a) The first worker b) The second worker c) The third worker d) The fourth worker
B) the second worker: 1) 14 2) 34-14=20 3) 45-34=11 4) 50-45=5
Pauls marginal product of capital from hiring a third operating room is? Google doc slide 6 for chart
C, 7
LBD PowerPoint slide 23: The price of labor is $100 per worker per week and the price of capital is $10 per unit. Jimmy's total cost of producing 700 units of output is: a) equal to the sum of his fixed and variable costs of producing this level of output. b) $500. c) greater than his total cost of producing 600 units of output. d) Answers (a), (b), and (c) are all true.
D
Thomas malthus predicted that as population grew, the economies diminishing ability to produce food from a given set of resources would necessarily lead to insufficient food. However, the population continues to grow and so does food population. What aspect of food production did malthus fail to anticipate?
He was considering diminishing returns. He did not take into account that in the long run, capital is subject can change
Powerpoint slide 5: Paul is a surgeon. The information in the table contains information about Paul's production function. It depicts Paul's: a) short-run production function. b) long-run production function
a) short run because quantity of labor (input) is fixed throughout the time frame.
Marginal product is the slope of the: a) marginal cost curve. b) total product curve. c) long-run average total cost curve. d) total cost curve.
b) total product curve.
inputs are usually-
capital (fixed, short run) or labor (variable)
3 ways the PPF can grow?
economic growth, RESOURCES, and technology
A fixed input is an
input whose quantity is fixed for a period
A variable input is an
input whose quantity the firm can vary at any time.
The short run is the...
period in which at least one input is fixed. Flexibility to hire inputs
A production function is the...
relationship between the quantity of inputs a firm uses and the quantity of output it produces.
The long run is...
the period in which all inputs can be varied. Full flexibility
The total product curve shows how...
the quantity of output depends on the quantity of the variable input for a given quantity of the fixed input.
Total cost and marginal cost curves (18) (look at graph) Marginal cost increases bc....
total cost goes up.