Homework #7

If a firm hires 5 workers at $50 a day and produces 10 units of output, its total labor cost is:

$250

The law of diminishing returns applies to:

the short run only.

You operate a car detailing business with a fixed amount of machinery (capital), but you have recently altered the number of workers that you employ per hour. As you increased the number of employees hired per hour from three to five, your total output increased by 5 cars to 15 cars per hour. What is the average product of labor at the new levels of labor?

3 cars per worker

Which of the following costs always declines as output increases?

Average Fixed Cost

The marginal product of an input is:

The addition to total output due to the addition of the last unit of an input , holding all other inputs constant.

The short run is:

a time period in which at least one input is fixed.

Assume that average product for six workers is fifteen. If the marginal product of the seventh worker is eighteen, then:

average product is rising.

In a short-run production process, the marginal cost is rising and the average total cost is falling as output is increased. Thus, marginal cost is:

below average total cost.

The situation where an increase in production leads to a decrease in average costs is known as

economies of scale

Tax burden generally falls on the group that is more:

inelastic.

For a given supply curve, the more elastic the demand curve is, the _______ after a tax is imposed.

larger the deadweight loss

In a short-run production process, the marginal cost is rising and the average variable cost is falling as output is increased. Thus:

marginal average is below average variable cost.

The slope of the total product curve is the:

marginal product.

When labor usage is at 12 units, output is 36 units. From this we may infer that:

the average product of labor is 3.

In a certain textile firm, labor is the only short term variable input. The manager notices that the marginal product of labor is the same for each unit of labor, which implies that:

the average product of labor is always equal to the marginal product of labor.

Marginal cost is:

the increase in cost for producing one more unit of output.

According to the law of diminishing returns:

the marginal product of an input will eventually decline.

The excess burden of a tax refers to:

the portion of consumer and producer surplus lost because of the reduction in the quantity sold.

The deadweight loss of a tax represents:

the producer and consumer surplus that is loss because of tax.