econ quiz/quest 3

law of diminishing returns

As successive amounts of one resource (labor) are added to fixed amounts of other resources (capital), beyond some point the resulting extra or marginal output will decline.

Is the U.S. border patrol a public or private good? How about satellite TV?

The U.S. border patrol is a public good, but satellite TV is a private good.

an explicit cost is

a money payment made for resources not owned by the firm itself.

The law of diminishing returns indicates that

as extra units of a variable resource are added to a fixed resource, marginal product will decline beyond some point.

When a bakery manager reports that at her bakery, productivity of her 15 workers last month was 1,800 loaves per worker, she is referring to the

average product of labor

In the short run, total output in an industry

can vary as the result of using a fixed amount of plant and equipment more or less intensively.

Marginal cost is the

change in total cost resulting from the production of one more unit of output

To the economist, total cost includes

explicit and implicit costs.

To economists, the main difference between the short run and the long run is that

in the long run all resources are variable, while in the short run at least one resource is fixed.

Tammy spends her money on lemonade and iced tea. If the price of lemonade falls, it is as though her income _______.

increases

Which is NOT an input in the production process? -equipment -workers -money -entrepreneurial ability

money

A public good is

nonrival and nonexcludable.

The free-rider problem occurs when

people benefit from the public good without contributing to the cost.

According to the law of diminishing marginal returns,

the additional output generated by additional units of an input will diminish.

Marginal product is

the change in total output attributable to the employment of one more worker.

When firms consider their output, they think of output as :

the final product that is sold in the market

The amount of calendar time associated with the long run

varies based on industry

Public goods are not privately provided because

when goods are nonexcludable, those people purchasing the good could simply allow others the use without requiring compensation.

Frank buys 10 magazines and 25 newspapers. The magazines cost $5 each and the newspapers cost $2.50 each. Suppose that his MU from the final magazine is 10 utils while his MU from the final newspaper is also 10 utils. According to the utility-maximizing rule, Frank should:

Reallocate spending from magazines to newspapers.