Microeconomics

Short - run refers to

a time period in which at least one input is fixed

Outsourcing of work by businesses is done with a view to

minimize Labor Cost

To understand theory of business, we have assumed that the firm produces _____ type(s) of output using _____ inputs.

one; two

A firm's short - run average cost of U - shaped. Which of these conclusions can be reached about the firm's returns to scale?

the short - run cost curves reveal nothing about returns to scale

Marginal Fixed cost of producing output is always _____ and average fixed cost continuously _____ as output is increased.

zero;falls

Consider the following table: Pairs of the pants products-TC of producing pants 0 --- $100 1 --- $120 2 --- $138 3 --- $155 4 --- $167 5 --- $185 Total Fixed cost of producing a pair of pants is?

$100

Q of P-TVC-MC-AVC-TFC-TC-AFC-ATC 0 = TC-100 1 = MC-50 2 = ATC-95 If no pizzas are produced, then TFC equals

$100

Assume that a firms production process is subject to increasing returns to scale over a broad range of outputs. Then long - run average cost over this output will tend to

decrease

Marginal Product of labor =

Change in Q/Change in L

The Framing Gallery frames posters. The Framing Gallery has total fixed cost of $500. The Framing Gallery's average variable cost is $20 and its average total cost is $25. The Framing Gallery is currently framing

100 posters

At a Pet Salon, the marginal products of the first, second and third workers are 10, 16, and 14 dogs washed, respectively. The total product (number of dogs washed) of three workers is

40

If short - run total output curve is upward sloping and this means that

as we increase number of workers, output increases.

If marginal product of labor equals the average product of labor, then the

average product of labor is at a maximum

The increasing portion of average variable cost is due to

decreasing average product of labor

Average Product of Labor equals

Q/L

Total Revenue is the same thing as

Sales Revenue

Pairs of pants products - TC of producing pants 0 - $100 1 - $120 2 - $138 3 - $155 4 - $167 5 - $185 Average variable cost of producing 5 pairs of pants is

$17

Pairs of pants produced-TC producing pants 0 $100 1 $120 2 $138 3 $155 4 $167 5 $185 Average fixed cost of producing 5 pairs of pants is

$20

Green Lawn mowing company has total costs of $4,000 and total variable cost of $1,000. Green Lawn mowing company's total fixed costs are

$3,000

0-TC-100 1-MC-50 2-ATC-95 Marginal cost of producing the second pizza is

$40

0 - TC-100 1 - MC-50 2 - ATC-95 If one pizza is produced, then TVC equal

$50

Pairs of pants produced-TC of producing pants 0 $100 1 $120 2 $138 3 $155 4 $167 5 $185 Total variable cost of producing five pairs of pants is?

$85

Consider the following table: L Q 0 0 1 12 2 32 3 42 4 50 5 55 Average Product of three workers is

14

Suppose when we add workers, output changes in the following manner: L Q 0 0 1 10 2 25 3 50 4 70 5 85 Marginal Product of Labor of the third worker is

25

Consider the following table: Labor Output 0 0 1 10 2 18 3 21 4 22 The output produced by the third worker is

3

Suppose the production for computer software disks (Q) is given as: Q = 100K + 50L This production function implies that marginal product of labor is

50

A firm determines that a 25% increase in all inputs will cause a 25% increase in output. Assuming that input prices are constant, you correctly deduce that such a change will cause _____ as output increases

?

At current level of output, the long - run marginal cost is $75 and the long - run average cost is $50. This implies that

?

Over the range where Marginal Product of labor is falling, marginal cost must be _____ and the firm must be experiencing _____.

?

Suppose your average annual income between 2005 and 2013 has been $35,000. In 2014, you earn $50,000 and your average annual income between 2005 and 2014 will change. To use an analogy in Economics, we would say

?

The costs that depend on output in the short - run are

?

When an industry achieves the minimum of long - run average cost at very low level of output, we would expect to find _____ number of _____ firms in that industry

?

Law of Increasing Marginal Product of Labor

implies that as we add more workers, output increases.

A mathematical expression of a relationship between physical units of inputs and output is called

Production function

Total Profits equal

Total Revenue - Total Cost

Assume that the average product of six workers is 15. If the marginal product of the seventh worker is 17

average product of labor is rising

The average total cost of producing electronic calculators is $20 at a current output level of 100 units per week. If total fixed cost is $1,000 per week

average variable cost is $10

Suppose the production for computer software disks (Q) is given as Q = 100K + 50L This production function exhibits

constant returns to scale

When all inputs double and output less than doubles. This is a situation of _____ in productivity and is called _____

decrease; decreasing returns to scale

In a firm produces nothing, then the total cost it incurs is the short - run is

entirely fixed cost

Consider the following table: L Q 0 0 1 10 2 25 3 50 4 70 5 85 Law of Diminishing Marginal Product of labor sets in when the

four worker is hired

In the short - run, we have assumed that

labor is a variable input and capital is a fixed input

Suppose long - run average cost is at a minimum. In such case,

long - run marginal cost will equal long - run average cost

One of the major reasons why most people get in to business is

make as much money as possible

Denison found that most of the increase in US GDP or output could be explained by

technology coefficient