Production Economics Tests
A purely competitive seller is:
A "price taker"
The long run production period is defined as
A period sufficiently long as to allow all inputs to be varied
In stage II of cubic functions:
All of these are true
A movement from lower to higher isoquants indicates:
An increase in the level of production
Fixed Cost is
Any cost which does not change when the firm changes its output
The basic difference between the short run and the long run is that:
At least one resource is fixed in the short run, while all resources are variable in the long run
In cubic production functions, Stage I is characterized by:
Average product increasing
In stage III of cubic production functions:
Average product is diminishing but is greater than zero
If the total product curve becomes progressively less steep as additional units of the variable input are used, but is still positive:
Average product may be rising or falling
If the slope of the total product curve increases as additional units of the variable input are used, this indicates:
The marginal product of the variable input is rising
If production occurs where marginal product is zero:
Total product is maximized
The optimum stage of production in terms of efficiency and unit costs occurs:
in stage II
Production is defined as any activity which creates
output
The demand schedule or curve confronted by the individual purely competitive firm is:
perfectly elastic
The demand curve in a purely competitive industry is _______, while the demand curve to a single firm in an industry is _______.
perfectly elastic; downsloping
An isoquant indicates:
the combinations of t inputs that will produce the same output
The marginal rate of technical substitution is ;
the slope of an isoquant
Isoquants slope downward from left to right because:
Inputs are substitutes
Suppose the production function is Q=14x+5x^2-x^3 The expression 14+10x-3x^2 is the:
Marginal Product
The change in total production, which results from one additional unit of the variable input is called the
Marginal Product
Which of the following is a characteristic of a purely competitive sellers demand curve?
Price and marginal revenue are equal at all levels of output
On a per unit basis economic profit can be determined as the difference between:
Product price and average total cost
The relationship between inputs of raw materials, labor, land, capital, and managerial skills and output can be expressed as
Production Function
An industry comprised of a very large number of sellers producing a standardized product is known as
Pure Competition
The ________ is the period of time in which at least one input is fixed; while the ________ is a period of time which all inputs are variable.
Short term analysis; Long term analysis
An isocost indicates:
The combinations of two inputs that can be purchased with a given expenditure
The locus of points of optimum input combinations is called:
The expansion path
Suppose the price of labor falls (horizontal axis). Which of the following would not happen
The isocost curve would rotate to the right
The change in total output resulting from increasing the variable input by one unit is called:
The marginal product of the variable input
A short term production function includes
Both variable and fixed inputs
Marginal Cost is the
Change is total cost that results from producing one more unit of output
Suppose that the quantity of all inputs increases by 30% while the output increases by 30%. This is a case of:
Constant returns to scale
Which of the following is not a true statement concerning the effect of a given technological advance?
Costs always rise because although less of some inputs may be required, more of other inputs are required
The MR=MC rule can be restated for a purely competitive seller as P=MC because:
Each additional unit of output adds exactly its price to total revenue.
