ch 7 econ

A firm has a fixed rent cost of $1,000 each month. They spend $2,000 on labor and produce 100 units. If the rent goes up to $1200, how much is the change in the average variable cost?

0.0

A firm produces 100 units with 10 people and 121 units with 11 people. The average product of the 11th person is ______ units.

11.0

Consider the table, which represents the short-run relationship between the number of units of labor hired and the amount of output produced while holding the amount of capital fixed. The marginal product of the third worker hired is:

16 units of iutput

he marginal product curve is maximized at a quantity of 230 and the average product curve is maximized at a quantity of 250. Where do the marginal and average product curves intersect?

250

Average cost is 100 when a firm produces 10 units. Average cost is 120 when they produce 11 units. What is the marginal cost?

320

rank's Fajitas can produce 45 fajitas per hour with five workers and one grill. The average product of labor at Frank's Fajitas is:

45/9 =9

onsider the table, which represents the short-run relationship between the number of units of labor hired, the total units of output, and the total cost of production. The average total cost of producing 20 units of output is:

700/20 =35

There is a cost function such that marginal cost is always less than average cost. What must be true about average cost?

Average cost is decreaisng

A firm decides to stop hiring more workers when marginal cost starts to rise because the manager says that at diminishing marginal product, output is falling with each additional input. I

Diminishing marginal product does not mean output is falling when additional workers are hired.

Frank's Fajitas can produce 45 fajitas per hour with five workers and one grill. One more worker will increase output by 6 fajitas per hour. If one more worker is hired, the average variable cost of production at Frank's Fajitas will:

TP/L was 9, now it is 8.5. Average variable cost = variable cost/output = (wage*L)/TP. Average cost was wage/9. Now it is wage/8.5.

Frank's Fajitas can produce 45 fajitas per hour with five workers and one grill. One more worker will increase output by 6 fajitas per hour. If the wage rate is $9 per hour, the marginal cost of increasing fajita production to 51 fajitas per hour at Frank's Fajitas is:

The change in total cost is $9.00. MC is the change in total cost divided by the change in output: $9.00/6 = $1.50.

If the rent on factory space (a fixed input) increases, at all levels of outp

Total costs will increase, average total costs will increase, average variable costs will remain the same, and marginal costs will remain the same in the short run.

A change in technology that (once implemented) makes each unit of labor more productive is likely to ______________ the marginal cost of production at each level of output (assuming all wages remain the same).

a technological change that increases the productivity of labor will allow each unit of labor to produce more, making changes in output less expensive.

A toxic work environment lowers the productivity of all workers. What happens to the average costs?

average cost increases

In the short run, input decisions are ______________. In the long run, input decisions are ______________.

constrained and unconstrained

A firm with some fixed costs and a constant marginal cost at all levels of production will have which of the following average cost relationships? As production increases, average total cost will:

decrease

Consider the table, which represents the short-run relationship between the number of units of labor hired and the amount of output produced while holding the amount of capital fixed. The average product of the second worker hired is:

divide Total Output by the number of workers: 38/2 = 19

If a firm is producing in an area of diminishing marginal returns, its average product must be:

either increase or decrease

If the marginal productivity of labor is rising at a certain level of output (while all other inputs remain unchanged), marginal cost must be:

falling level of output

If marginal productivity of labor is falling, by hiring another unit of labor (all else held the same) we know that:

here is an inverse relationship between marginal productivity and marginal cost. Note: a is not correct because we would have to know where marginal productivity is relative to average productivity to know is average productivity will rise or fall.

A shock to technology doubles output for every employee hired. What happens to marginal product of labor?

increases

The observation that increases in output get smaller as more of one input is added to production is called:

law od dim margianl return

A firm's marginal product will be at a maximum at which of the following levels of output?

less than quanity where average cost is the min

If the average cost is always falling, which of the following must be true?

marginal cost is below average cost

In this table, the marginal cost of producing the 300th unit of output is:

marginal cost is the change in total cost/change in output = $800/100 = $8.00. It can also be calculated as the change in variable cost/change in output (because fixed costs will not change).

The law of diminishing marginal returns means that when one uses more and more of an input:

output increase decrease at a rate

At output equal to 100 the marginal cost is 20 and the average cost 18. At output equal to 101 the marginal cost is 22. At output equal to 101 average cost will:

rise above 18

Consider a graph that depicts the total cost function and the fixed cost. What is the difference between the total and the fixed costs?

variable cost