short-Run Production and Cost

If the difference between average total cost (ATC) and average variable cost (AVC) at 100 units of output is $1.00, then at 300 units of output the difference between ATC and AVC must be:

$.33

Economists (and Econ 165 students) are primarily interested in the relationship between production and costs because:

along with an assumption of profit maximization, this relationship allows us to predict how firms will act under different circumstances.

Short-run average variable costs:

are only at a minimum when labor is, on average, most productive.

Short-run average total costs eventually rise because of:

diminishing marginal and average productivity of the variable input(s).

Assuming that labor is the only short-run variable input in the production process, AVC (average variable cost):

equals the wage rate (w) times labor (L) divided by output (Q) [(wL)/Q.]

When the short-run total product curve (the production function) for a firm:

increases but at an increasing rate, the MPL is above (greater than) the APL.

If average fixed cost is declining, then:

it is impossible to determine what is happening to MC, AVC, or ATC without more information.

All of the following describe marginal cost except marginal cost is (does) not:

positively related to the short-run marginal product of labor (MPL).

In the short-run, a profit-maximizing firm will produce additional units of a product as long as:

price at least covers average variable cost.

Short run cost curves are U-shaped due to:

the returns to specialization of labor that occurs at low production levels and the congestion that occurs at high production levels.

If we know that capital is fixed and a business firm can produce 36 units of output per day with 3 workers and 44 units of output per day with 4 workers, then we know all of the following except:

we know all of the above.

Which of the following does not reflect a short-run decision?

Should a new plant be built if sales increase?

In the short run, the firm's production curves exhibit all of the following relationships except:

TPL begins to decrease when APL begins to decrease.