Microeconomic November
Negative technology change is when
A firm must use more inputs to produce the same output
The law of diminishing states that
Adding more of a variable input to the same amount of a fixed input will eventually cause the marginal product of the variable input to decline
An example of technological change is
All of the above
For which of the following reasons may firms experience economies of scale
All of the above
In the initial stages of production, specialization and division of labor lead to an increasing marginal product of workers
Allowing workers to concentrate on a few tasks so that they become more skilled at doing them quickly and efficiently
How are implicit costs different from explicit costs?
An explicit cost is a cost that involves spending money, while an implicit cost is a nonmonetary cost.
A firm might experience economies of scale because
As a firm
Suppose a firms average total cost curve is decreasing with output. What can be said of its marginal cost curve? The firms marginal cost curve must be
Below the average total cost curve
How is price elasticity of demand measured?
By dividing the percentage change in the quantity demanded of a product by the percentage change in the product's price.
Economic of scale happen when the firms long run average total cost as our out increases
Decreases
What is the main reason that firms eventually encounter diseconomies of scale as they keep increasing the size of their store or factory
Firms have difficulty coordinating production.
What happens when the quantity is very responsive to changes in price? The percentage change in quantity demanded will be
Greater than the percentage change in price
What is the distinction between the economic short run and the economic long run
In the short run, at least one input is fixed, but in the long run, the firm can vary all inputs.
What is the difference between the short run and the long run
In the short run, at least one of a firm's inputs is fixed, while in the long run, a firm is able to vary all its inputs and adopt new technology.
When the marginal product of labor is greater than the average product labor, then the average product of labors must be
Increasing
Is it possible for technological change to be negative? If so, give an example
It is possible for technological change to be negative. An example is when a hurricane damages a firm's facilities
the marginal cost curve insect both the average variable cost and the average total cost curves at their (blank) points
Minimum
Is it possible for a firm to experience a technological change that would increase the marginal product while leaving the average product of labor unchanged
No. An increase in the marginal product of labor will increase the average product of labor
The income elasticity of demand for a normal good is and for an inferior good is
Positive;negative
The relationship between the inputs employed by a firm and the maximum output it can produce with those inputs is called the
Production function
What is the difference between technology and technological change
Technology is the process of using inputs to make output, while technological change is when a firm is able to produce the same output using fewer inputs
A short run production holds constant
The amount of capital
Which of the following terms to the lowest cost at which a firm is able to produce a given level of output in the long run, when no inputs are fixed
The long run average cost curve
Technology is
The processes a firm uses to turn inputs into outputs of goods and services
A training program makes a firms workers more healthy and productive
This is an example of positive technological change
A firm is able to cut each worker's wage rate by 10 percent and still produce the same level of output.
This is not an example of positive technological change
Firms often rely on market experiments to calculate the price elasticity of demand for a new product.
True
Which cost are affected by the level of output produced
Variable cost
Economics of scale occurs
When a firms long run average cost decrease with output
Disecomonies of scale
When a firms long run average cost increase with output
Which of the following is true of the relationship between the average product of labor and the marginal product of labor
Whenever the marginal product of labor is greater than the average product of labor, the average product of labor must be increasing.
An implicit cost is
a non-monetary opportunity cost
What is the difference in the short run and the long run? In the short run,
at least one of the firm's inputs is fixed, while in the long run, the firm is able to vary all its inputs, adopt new technology, and change the size of its physical plant
further, positive technological change is defined as
being able to produce more output using the same inputs being able to produce the same output using fewer inputs
Which of the following is most likely to a variable cost for a business firm
cost of shipping products
As the level of output increases, the difference between the value of average total cost and average variable cost
decreases because average fixed cost decreases as output increases.
Any cost that remains unchanged as output changes represents a firm's
fixed cost
A firms production function is best described as
illustrating the relationship between inputs and the maximum amounts of output that the firm can produce with these inputs.
Which of the following is most likely to be a fixed cost for a farmer
insurance premiums on property
If the income elasticity of SUVs is greater than 1 what is the good considered
luxury
When a positive technological change occurs
more output can be produced from the same inputs the same output can be produced with fewer inputs
Income Elasticity
percentage change in quantity demanded/percentage change in price
What is the formula for the price elasticity of demand
percentage change in quantity demanded/percentage change in price
For a normal good, the income elasticity of demand will be
positive, but for an inferior good, the income elasticity of demand will be negative
The law of diminishing returns applies
short run
To estimate the price elasticity of demand, economists need to know
the demand curve for a product
The production function is the relationship between
the inputs employed by a firm and the maximum output it can produce with those inputs.
cross-price elasticity of demand
the percentage change in the quantity demanded of one good divided by the percentage change in the price of another good
In economics, the best definition of technology is
the process a firm uses to turn inputs into outputs
What is the difference between total cost and variable cost in the long run? In the long run,
the total cost of production equals the variable cost of production.
Any cost that changes as output changes represents a firm's
variable cost