Econ chapter 11

Which of the following is correct about marginal and average​ products?

When the marginal product exceeds the average​ product, the average product must be increasing.

The downward sloping part of the long run average total cost curve is where the firm is achieving:

economies of scale

When a​ firm's long−run average total cost decreases as its output​ increases, the firm is experiencing

economies of scale

At the Punjab​ Bakery, two workers can decorate 14 cakes in an hour and three workers can decorate 18 cakes in an hour. The marginal product of the third worker is

4 cakes and the average product for three workers is 6 cakes.

economies of scale

LRAC down as quantity goes up

diseconomies of scale

LRAC goes up as quantity goes up

Mc curves intersects the ATC and AVC curves at their

minimum point

What is the name for the additional output that a firm produces as a result of hiring one more worker?

marginal product of labor

If a business owner decided to expand her business but rather than borrowing money from a bank used her own​ funds, then

she would be unable to forego the opportunity to earn interest on the money

What does the long−run average cost curve​ show?

the lowest average cost to produce each output level in the long run

The long run is defined as

the period of time when all resources are variable

In​ economics, the best definition of technology is

the process a firm uses to turn inputs into outputs.

Moving from left to right along a long-run average cost curve,

the scale of production always increases.

Which of these costs are affected by the level of output produced?

variable costs

Average Variable Cost (AVC)

variable costs divided by quantity of output

The relationship between the inputs used by the firm and the maximum output it can produce is known as the:

production function

The total variable cost curve ____ because ____ as output increases.

slopes upward; variable cost increases

The total variable cost curve​ ________ because​ ________ as output increases.

slopes​ upward; variable cost increases

The main source of economies of scale is

specialization.

Which of the following always decreases when output​ increases?

average fixed cost

positive technological change is defined as

being able to produce more output using the same inputs and being able to produce the same output using fewer inputs.

Increasing marginal returns always occurs when the

marginal product of an additional worker exceeds the marginal product of the previous worker

Increasing marginal returns occur when the

marginal product of an additional worker exceeds the marginal product of the previous worker

The short run is

the time frame in which some resources are fixed.

When graphing a conventional short-run production function, we place __________ on the horizontal axis and __________ on the vertical axis.

the variable input, output

One of the major reasons for the U-shaped average total cost curve is the fact that

there eventually are decreasing returns from labor as more workers are employed.

Average Total Cost (ATC)

total costs divided by quantity of output

Which of the following is correct for variable and marginal costs?

they will equal zero if nothing is produced

average product of labor APL

total output divided by the number of workers

The marginal product of labor equals the change in​ ________ from a one−unit increase in the quantity of labor.

total product

Total product is equal to the

total quantity produced in a given time period

f a firm does not produce any​ output, its

total variable cost must be zero

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.

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 more output using the same inputs.

Decreasing marginal returns occur in the short run as more labor is hired to work in a fixed sized plant because

adding more workers exhausts the possible gains from specialization.

Minimum efficient scale is the level of output at which:

all economies of scale have been exhausted

A cost paid in money is

an explicit cost and an opportunity cost.

Short-run decisions ____ easily reversed; long-run decisions ____ easily reversed.

are, are not

If the number of people in a publishing company does not go up or down with the quantity of books it publishes, then how should we categorize the salaries and benefits paid to these employees?

as a part of fixed cost

A firm can enjoy economies of scale because of increased specialization of

capital and/or labor

As a typical firm increases its​ output, its marginal cost

decreases at first then increases

If a firm increases the size of its plant and its labor force by the same percentage and as a result its average total cost increases, then the firm is experiencing

diseconomies of scale

When a firm becomes so large it is difficult to coordinate and control, it is most likely that

diseconomies of scale have begun

Jeremiah runs a bullfrog farm in​ Frogville, Oklahoma. Jeremiah notices that each additional worker he employs adds more to the total output than does the previous worker. Jeremiah must be

experiencing increasing marginal returns to labor

Which of the following are sometimes called accounting costs?

explicit

In the short-run, the cost that is independent of the amount of output produced is called __________.

fixed cost

Average Fixed Cost (AFC)

fixed costs divided by quantity of output

When marginal cost is positive, total cost is ____ as output increases.

increasing

When the marginal product of labor is greater than the average product of labor, then the average product of labor must be:

increasing

The short-run average total cost, average variable cost, and marginal cost curves are all U-shaped because of

increasing and then decreasing marginal returns as more labor is hired.

To produce more output in the short​ run, a firm must employ more of

its variable resources

Diseconomies of scale can occur as a result of which of the following?

management difficulties as the firm increases its size

If average variable costs increase as output​ increases, then

marginal cost must be greater than average variable cost.

Scott owns a law−enforcement training operation in​ Boise, Idaho. He employs three trainers. The last trainer Scott hired increased​ Scott's total cost by​ $466 per week even though the trainer brought in only one new client. Hence​ Scott's

marginal cost of the last client equals​ $466.

Which of the following is known as the highest-valued alternative that must be given up in order to engage in an activity?

opportunity cost

When an economist uses the term​ "cost" referring to a​ firm, the economist refers to the

opportunity cost of producing a good or​ service, which includes both implicit and explicit cost.

The total product curve shows the relationship between

output and the quantity of labor.

Economies of scale and diseconomies of scale explain

the U-shape of the long-run average cost curve.