Microeconomics Ch 4
If 20 workers each earn $12 per hour and each produce on average 2.5 widgets per hour, what is the average cost of labor? $ 4.80 $ 8.33 $ 240 $ .24
$ 4.80 The cost of labor is $240 ($12 per worker times 20 workers), and the total product is 50 widgets (2.5 widgets per worker times 20 workers). $240 divided by 50 equals $4.80. A quicker way to figure the average cost of labor in this problem is to divide $12 (the wage for 1 worker) by 2.5 (the output per average worker).
Examine the graph below. The marginal cost at 30 units of output is $500. $100. $200. equal to variable cost.
$100. The point on the horizontal axis associated with 30 units of output is at a marginal cost of $100. The marginal costs are on the vertical axis.
Suppose that a digital camera firm can produce five cameras per worker each week. If the firm hires one worker, it will cost the firm $2,000 a week to pay the worker's salary. To produce 30 digital cameras, the firm's variable costs for the week will be $2,000. $12,000. $60,000. $30,000.
$12,000. The variable costs for the week are calculated by multiplying the number of workers needed for one week by the wage each worker receives.
If a firm used $200 worth of variable inputs to produce 100 units of output, what is the average variable cost of the output? $20,000 per unit $.50 per unit $2.00 per unit $5.00 per unit
$2.00 per unit To calculate average variable cost (AVC), divide the cost of the variable inputs by the number of unit of output those inputs created.
Assume that a company has a wage cost of $1000 per worker per week. If three workers can make 15 units of the product in week, the firm's average variable cost is $3000. $1000. $200. $100.
$200. The average variable cost is total variable cost divided by then units of output: $3000/15 = $200.
Refer to the graph below. The firm in this example produces bicycles. To produce 40 bicycles, the firm's variable cost is about $7000 $4000 $2000 $6000
$4000 Find the point on the horizontal axis for 40 bicycles, then find the associated point on the graph and the cost associated with that point. The cost is on the vertical axis.
Use the table below. This firm has a variable cost of $1,000 per worker. In order to produce 45 bikes, it costs the firm $_________ because __________________. $1,000; one worker can produce 45 bicycles and is paid $1,000 in wages. $5,000; 1 worker can produce 45 bicycles and is paid $5,000 in wages. $3,000; 3 workers can produce 45 bicycles and each is paid $1,000 in wages. $5,000; 5 workers can produce 45 bikes and each is paid $1,000 in wages.
$5,000; 5 workers can produce 45 bikes and each is paid $1,000 in wages. Find the coordinates on the graph that correspond to 45 bicycles and a particular cost.
Suppose that a digital camera firm can produce five cameras per worker each week. If the firm hires one worker, it will cost the firm $2,000 a week to pay the worker's hourly wages. The firm's variable cost for three workers is $2,000. $3,000. $4,000. $6,000.
$6,000. The firms variable costs can be found by multiplying the number of workers by the cost of labor.
On Monday, 5 workers produced 45 widgets; on Tuesday, 6 workers produced 60 widgets; on Wednesday, 7 workers produced 77 widgets; on Thursday, 8 workers produced 96 widgets; and on Friday, 9 workers produced 99 widgets. If workers are paid $100 per day, what is the average variable cost of labor for the week? $9.09 $9.28 $3,500 $1.07
$9.28 The variable cost of labor was $3,500, and the total product (TP) for the week was 377 widgets. $3,500 divided by 377 equals approximately $9.28 per widget.
During the first week of October, the workers at Walton's Widget Factory produced the following outputs: on Monday, 10 workers produced 250 widgets; on Tuesday, 11 workers produced 286 widgets; on Wednesday, 13 workers produced 364 widgets; on Thursday, 14 workers produced 396 widgets; and on Friday, 12 workers produced 324 widgets. What is the average product of labor per person, per day? 324 widgets 27 widgets 1,620 widgets The question is not answerable without information about the wage rate.
27 widgets The average product of labor is the total product(250 + 286 + 364 + 396 + 324 = 1,620)divided by the number of workers(10 + 11 + 13 + 14 + 12 = 60).
If the worker has an average product of one-third of a video camera, (1/3), how many workers would it take to produce one whole video camera? 1 2 3 4
3. The amount of workers needed to produce a whole video camera is the reciprocal of the average product of one worker. If one worker produces 1/3 of a camera, it requires three to produce one camera.
If each of 9 workers produces 12 widgets per day and each of 10 workers produces 14 widgets per day, what is the marginal product of the tenth worker? 1 widget 2 widgets 32 widgets 140 widgets
32 widgets Total product (TP) for 9 workers is 108 widgets per day, and TP for 10 workers is 140 widgets, so the marginal product (MP) for the tenth worker is 140 widgets minus 108 widgets, or 32 widgets.
Using the table, the average product of labor for six workers is 4.83. 6. −6. −4.83.
4.83. Calculate the average product of labor by dividing the total output of six workers by the total number of workers.In this case it is 29/6 = 4.83.
Examine the graph below. The maximum efficient output of bicycles for this firm is 45 bicycles. 30 bicycles. 50 bicycles. 10 bicycles.
50 bicycles. The firm can produce 50 bicycles at a variable cost of $7000. Further additions of labor cause production to fall, but add to variable cost. The part of the variable cost curve that bends back after 50 bicycles shows production levels that are inefficient.
Suppose that a digital camera firm can produce five cameras per worker each week. If the firm hires one worker, it will cost the firm $2,000 a week to pay the worker's hourly wages. To produce 30 digital cameras in one week the firm will hire _________ workers. 5. 3. 6. none of the above.
6. Each worker can produce five digital cameras. Six workers are needed for the production of thirty cameras.
Using the table, the average product of labor for three workers is 7. 6.75. 7.5 7.33.
7.33 Calculate the average product of labor by dividing the total output of three workers by the number of workers, three. It is 22/3 = 7.33
Which of the following statements about average variable cost (AVC) is true? Average variable cost (AVC) is the same as marginal variable cost. Average variable cost (AVC) is unimportant to an entrepreneur. Average variable cost (AVC) increases or decreases whenever fixed costs increase or decrease. Average variable cost (AVC) is the variable cost divided by the number of units produced.
Average variable cost (AVC) is the variable cost divided by the number of units produced. Average variable cost is the variable cost per unit of total product.
Which of the following statements about average variable cost (AVC) is true? Average variable cost (AVC) is the variable cost per unit of total product (TP). A firm with a low average variable cost (AVC) is profitable. Average variable cost (AVC) is the same as marginal variable cost. Average variable cost (AVC) increases whenever marginal product increases.
Average variable cost (AVC) is the variable cost per unit of total product (TP). The definition of average variable cost (AVC) is the variable cost per unit of total product (TP).
Why does average variable cost (AVC) change as output changes? Average variable cost reflects changes in productivity. Total variable cost decreases with each additional unit that is produced. Total variable cost increases with each additional unit that is produced. It doesn't; average variable cost (AVC) is the same at every level of output.
Average variable cost reflects changes in productivity. Average variable cost (AVC) decreases as productivity increases.
Examine the graph below for a particular firm that produces bikes. The point of inefficiency at which the firm cannot increase production by hiring more labor is at point D. C. B. A.
D. Inefficiency occurs when the firm hires the eighth employee. The firm can produce 50 bicycles with only seven employees. The eighth employee adss no more to total product.
Why are average variable costs (AVC) a factor in profitability? The company with the lowest average variable cost (AVC) is the most profitable. For a company to be profitable, its average variable cost (AVC) must be lower than the market price of each unit. If two companies produce the same product and have the same fixed costs, the company with the higher average variable cost (AVC) will be more profitable. Decreasing average variable costs mean decreasing productivity.
For a company to be profitable, its average variable cost (AVC) must be lower than the market price of each unit. If a company is profitable, its average variable costs (AVC) plus its average fixed costs must be lower than the price at which it can sell each unit of output.
Which of the following is an adjustment that would be made in the short run? Saturn builds a new automobile plant. A major university builds a new school of education because their enrollment increases. Gymnastics Unlimited hires two new workers because the demand for their service has increased. A soap company enters the market with a new product.
Gymnastics Unlimited hires two new workers because the demand for their service has increased. Hiring more workers is likely to be a short run adjustment, because it is one of the only production variables that can be changed in a short period of time.
Which of these statements is false? In the long run, all inputs are variable. In the short run, the firm can change output only by changing its variable inputs. In the short run, all inputs are variable. In the long run, a firm can change any input.
In the short run, all inputs are variable. In the short run, only labor is variable.
Which of the following is true of marginal cost (MC)? Marginal cost (MC) is the same as marginal product. Marginal cost (MC) is the same as average cost. Marginal cost (MC) of labor is the wage rate divided by the marginal product. Marginal cost (MC) is the same as total cost.
Marginal cost (MC) of labor is the wage rate divided by the marginal product. The marginal cost of labor is equal to the product of the wage times the change in labor, divided by the change in total product.
Examine the graphs below. The inflection point of the variable cost curve is associated with the marginal cost curve in what way? Marginal cost is decreasing at the variable cost's inflection point. Marginal cost is increasing at the variable cost's inflection point. The variable cost and marginal cost curves are unrelated. Marginal cost is at a minimum when the variable cost curve reaches its inflection point.
Marginal cost is at a minimum when the variable cost curve reaches its inflection point. The inflection point is the point at which the varible cost begins increasing at an increasing rate. The slope of the variable cost curve is zero at that point. Marginal cost is at a minimum.
What is marginal product (MP)? Marginal product (MP) is a product of marginal (barely acceptable) quality. Marginal product (MP) is the change in total product made possible by the addition of one (1) more unit of a variable input. Marginal product (MP) is the same as average product. Marginal product (MP) increases when total product decreases.
Marginal product (MP) is the change in total product made possible by the addition of one (1) more unit of a variable input. The change in total product resulting from the addition of one (1) more unit of a variable input is the definition of marginal product (MP).
Which of the following statements about marginal product (MP) is true? Marginal product (MP) is usually graphed with total product on the vertical axis and labor on the horizontal axis. Marginal product (MP) is usually graphed with cost on the vertical axis and marginal product on the horizontal axis. Marginal product (MP) is usually graphed with marginal product on the vertical axis and the variable input on the horizontal axis. Marginal product (MP) is usually graphed only when marginal product is increasing.
Marginal product (MP) is usually graphed with marginal product on the vertical axis and the variable input on the horizontal axis. The independent variable is usually graphed on the horizontal axis, and the variable input (e.g., labor) is the independent variable.
The average product of labor for 10 workers is 9 widgets per day, and the marginal product of labor of the 11th worker is 20 widgets. If each worker earns $100 per day, what happens to the average cost of labor when the firm adds the 11th worker? The average cost of labor increases from $1,000 to $1,100. The average cost of labor remains constant at $100. The average cost of labor decreases from $11.11 to $10.00. The average cost of labor is $5 per unit.
The average cost of labor decreases from $11.11 to $10.00. The average cost of labor is the cost of labor divided by the total product, so the average cost of labor for 10 workers is $1,000 (10 workers times $100 per worker) divided by 90 widgets (10 workers times 9 widgets per worker), or $11.11 per widget. The average cost of labor for 11 workers is $1,100 (11 workers times $100 per worker) divided by 110 widgets (90 widgets plus 20 widgets), or $10 per widget.
What is the average product of labor? The average product of labor is total wages divided by the number of workers. The average product of labor is the number of workers times their average hourly wage. The average product of labor is the total product divided by the number of workers. The average product of labor is the marginal product divided by the number of workers.
The average product of labor is the total product divided by the number of workers. The average product of labor is a measurement of the productivity of the average worker.
Which of these statements about the average variable cost (AVC) curve is true? The average variable cost (AVC) curve is identical to the marginal cost (MC) curve. The average variable cost (AVC) curve is similar in shape to the variable cost (VC) curve. The average variable cost (AVC) curve is a mirror image of the average product of labor curve. The average variable cost (AVC) curve always has a positive slope.
The average variable cost (AVC) curve is a mirror image of the average product of labor curve. Because the average variable cost (AVC) equals the wage rate divided by the average product of labor, the average variable cost (AVC) curve and AP(L) behave like reciprocals.
Which of the following statements about the graphs of marginal cost (MC) and marginal productivity (MP) is true? The graphs of marginal cost (MC) and marginal productivity (MP) are unrelated. The graphs of marginal cost (MC) and marginal productivity (MP) look like inverted images of each other. The graphs of marginal cost (MC) and marginal productivity (MP) are identical. The graphs of marginal cost (MC) and marginal productivity (MP) are both determined by total cost.
The graphs of marginal cost (MC) and marginal productivity (MP) look like inverted images of each other. Because the marginal cost equals the wage rate divided by the marginal product, MC and MP behave like reciprocals.
When marginal productivity is at its maximum, which of the following is true? Profit is at a minimum. The marginal cost (MC) of labor is at a minimum. A firm is profitable. Average cost is maximized.
The marginal cost (MC) of labor is at a minimum. Marginal productivity and marginal cost are inversely related; when one is high, the other is low.
If a firm's variable cost to produce 80 widgets is $1,000 and its variable cost to produce 81 widgets is $1,012, which of the following is true? The firm is operating at maximum efficiency. The marginal cost to produce the 82nd widget will be $1,012. The total variable cost is $2,012. The marginal cost is $12.
The marginal cost is $12. The marginal cost of the 81st widget is the additional cost incurred to produce the 81st widget, or the change in the variable cost—in this case, $1,012 − $1,000.
Which of these statements about the marginal product (MP) curve is true? The marginal product (MP) curve usually starts high and decreases rapidly. The marginal product (MP) curve alternately increases and decreases with each additional unit of input. The marginal product (MP) curve usually is asymptotic with respect to the vertical axis. The marginal product (MP) curve usually starts small, increases to a maximum, and starts to decrease.
The marginal product (MP) curve usually starts small, increases to a maximum, and starts to decrease. The marginal product (MP) curve usually starts at (0, 0), rises during the period when specialization and teamwork increase productivity, reaches a maximum, and slowly decreases because of congestion.
If marginal product (MP) is negative, which of the following is true? Profit is maximized. Marginal cost is decreasing. Average product is increasing. The slope of the total product curve is negative.
The slope of the total product curve is negative. If marginal product (MP) is negative, total product (TP) is decreasing; if TP is decreasing, the slope of the TP curve is negative.
When marginal product (MP) is increasing, which of the following is true for the total product (TP) curve? The total product (TP) curve is convex. The total product (TP) curve is concave. The total product (TP) curve may be either convex or concave. The total product (TP) curve flattens out.
The total product (TP) curve is convex. When MP is increasing, the TP curve will become steeper and steeper because the "rise" for each successive unit of "run" will be larger than it was for the previous unit.
Which of the following represents the relationship between marginal cost and marginal productivity? The two are unrelated. When marginal product increases, marginal costs are negative. When marginal product increases, marginal cost increases. When marginal product increases, marginal cost decreases.
When marginal product increases, marginal cost decreases. Cost and productivity are inversely related so when marginal product increases, marginal cost decreases. Marginal cost is always a function of marginal product.
Which of the following statements about the average product of labor is true? When the average product of labor is increasing, the average variable cost is decreasing. When the average product of labor is maximum, average variable cost is maximum. When a workforce becomes more productive, the average product of labor decreases. The average product of labor is unrelated to the average variable cost.
When the average product of labor is increasing, the average variable cost is decreasing. As the average product of labor increases, the cost for each unit of output decreases.
The short run is a period of time so short that a firm can vary all its inputs. a firm can vary one of its inputs. a firm cannot vary any inputs. a firm can sell only some of its inventory.
a firm can vary one of its inputs. In the short run, most of a firm's inputs are fixed. The one input that a firm can vary in the short run is labor.
When the workforce gets more productive, the cost of producing additional output drops and each additional worker is more productive. teamwork and specialization occur. marginal costs is falling. all of the above.
all of the above. the cost of producing additional output drops and each additional worker is more productive. teamwork and specialization occur. marginal costs is falling. As the workforce becomes more productive, the cost of producing extra bikes falls as employees become more efficient through teamwork and specialization. Thus, the marginal cost of production falls.
Marginal cost equals the variable cost of the additional unit of production minus the variable cost of the previous unit produced. the change in variable costs divided by the change in output. the change in total cost divided by the change in output. all of the above.
all of the above. the variable cost of the additional unit of production minus the variable cost of the previous unit produced. the change in variable costs divided by the change in output. the change in total cost divided by the change in output. Marginal cost is the cost incurred by producing one additional unit of a good. This can be calculated for a single unit by simply taking the difference in total variable costs before and after its production, as answer A suggests. To calculate the marginal cost per unit of an additional number of units, you must divide the change in total variable cost by the number of units produced, as answer B says. And since fixed costs do not change, any change in total costs is equal to the change in variable costs, making answer C equivalent to answer B.
At the maximum average product, marginal product is greater than average product. average product is greater than marginal product. average product and marginal product are equal. there is no relationship between average product and marginal product.
average product and marginal product are equal. Marginal product is the output of the additional employee. That output will either push the average up or drag the average down. If it pulls the average up, then the average rises; if it drags the average down then the average falls. The two intersect at the point where they are equal.
Use the graph. When the marginal product of labor is ___________ the average product of labor, the average product curve is ___________. above; equal to the MP. above; falling. below; rising. below; falling.
below; falling. When the marginal product of labor is below the average product of labor, the average product curve is falling. This happens because each additional unit of labor adds less to total product than the average of the previous units. Therefore the last unit of labor brings the average down.
When total product increases at an increasing rate, the firm employs team work. specialization. both A and B. neither A nor B.
both A and B. team work. specialization. When total product increases at an increasing rate, the marginal product is increasing because there is teamwork and specialization among the employees.
If labor is a firm's only variable input, its variable cost ultimately depends on the amount of labor the firm needs to produce a given quantity of output. the price a firm must pay to get a unit of labor. both a and b. neither a or b.
both a and b. the amount of labor the firm needs to produce a given quantity of output. the price a firm must pay to get a unit of labor. Variable costs depend on the total amount of labor the firm needs to use in order to produce a given quantity of output and how much each unit of labor will cost the firm. In the short run, labor is often the only variable input.
Assume that employees in a factory have an average product of one-third of a video camera. Eventually the workers learn their jobs better and the average product increases to two-thirds of a camera. The firm's costs decrease by one-half. increase by one-half. do not change. are indeterminate.
decrease by one-half. Since costs and productivity are inversely related, any increase in productivity produces a decrease in costs. If each worker's productivity increases, then costs must decrease.
This total product curve illustrates that when the quantity of labor increases from five workers to six, the total product decreases. increases. remains the same. none of the above.
decreases. When labor increases from five to six workers, total product decreases. The reason for this phenomenon is that at some point more employees start getting in each other's way and cause congestion in the workplace. Each employee is unable to efficiently use the fixed inputs, so total product actually falls.
When the marginal product curve falls below the horizontal axis, the addition of an extra worker actually ____________ the total production of a firm. increases. decreases. has no affect on. none of the above.
decreases. When the marginal product curve falls below the horizontal axis, the addition of an extra worker decreases total production of the firm and the marginal product is negative. In the coordinate system, any point below the horizontal axis mans that the Y-variable is negative.
When each additional worker produces more output than the previously hired worker, the marginal cost of production is increasing. decreasing. the same as before. the same as the average.
decreasing Marginal product is the output of the additional worker. When it increases, the marginal cost must be falling.
When total product is increasing at a decreasing rate, marginal product is increasing. decreasing. negative. constant.
decreasing When total product increases at an decreasing rate, marginal product must be falling because marginal product is the rate of change of total product.
Given the firm's technology and the firm's cost to produce output, economists are able to predict a firm's profit. T/F
false Economists also need a product's price to predict a firm's profits.
In the concave portion of a total product curve, the marginal product is increasing because the employees are learning teamwork and specialization. T/F
false In the concave potion of the a marginal product curve, the marginal product is increasing at a decreasing rate, meaning that the employees are becoming less efficient. At the output levels in this portion, the employees are less able to use the fixed inputs efficiently.
Productivity and costs are directly related. T/F
false Productivity and costs are inversely related. They are mirror images of each other.
Average cost indicates to the firm the profit-maximizing output level. T/F
false The average variable cost tells the firm whether a certain output could be profitable, but it does not indicate the correct output level.
The axes of the total product curve and variable cost curve are the same. T/F
false The axes for both the total product curve and the variable cost curve are reversed.
Whether a firm classifies an input as fixed or variable depends on the contribution that input makes to the firm's output. T/F
false The classification depends on whether the input varies with the output.
Examine the graph below. The inflection point on the variable cost curve is at 50 units of output. T/F
false The inflection point on the variable cost curve is the point at which variable cost start increasing at an increasing rate. On this graph, the point is at 30 units of output.
The marginal product of labor is always increasing. Therefore, marginal costs are constantly decreasing. T/F
false The marginal product of labor increases at low levels of output, but eventually decreases. When it decreases, marginal cost increases.
The more productive a firm's workers are, the more workers that firm will need to hire to produce a given amount of product. T/F
false The more productive workers are, the fewer workers a firm needs to hire.
The exhibit shows the total product for VCR's in the short run given amounts of the fixed input of labor, holding other inputs constant. T/F
false This exhibit shows total output given the variable input of labor holding other inputs constant.
Costs that do not change with output are called marginal costs. average costs. variable costs. fixed costs.
fixed costs. Fixed costs do not change with output. They remain constant no matter what the output level.
Assume that there are 10 students in a class. The average grade on a test for the nine of the students is 85. The grade of the tenth student is 90. The average grade for the class will be 85. greater than 85. lower than 85. 90.
greater than 85. The marginal grade is higher than the average so the average increases. Since the marginal score is 90, the average must increase to something greater than 85.
The average product-marginal product relationship indicates that if the marginal product is less than the average product, the average product is falling. if the marginal product is greater than the average product, the average product is falling. if the marginal product is increasing, the average product is above it. if the marginal product is decreasing, the average product is below it.
if the marginal product is less than the average product, the average product is falling. The marginal product is the production of the last unit of labor. That worker's production must be either above or below the average so it pulls the average either up or down.
Use the table below. This firm has a variable cost of $1,000 per worker. When the variable cost curve is increasing, a(n) ___________ in labor will ___________ production. decrease; increase increase; increase decrease; decrease increase; decrease
increase; increase When the variable cost curve is increasing the quanity of bikes produced is increasing.
The output from adding the second unit of labor increases at an increasing rate. increases at a decreasing rate. decreases at an increasing rate. decreases at a decreasing rate.
increases at an increasing rate. The total product schedule shows that at small quantities of labor (one or two workers), the addition of one more worker increases the output at an increasing rate. The additional output from one more worker is the marginal product of labor. The first worker added 5 units of output. The second added 10.
Diminishing marginal product of labor is associated with increasing marginal cost. increasing average cost. decreasing marginal cost. decreasing variable cost.
increasing marginal cost. When the marginal product decreases, marginal costs must increase. Marginal costs are related to marginal product by moving in the opposite direction.
When the average product of labor is _____________, the average variable cost is _______________. increasing; decreasing increasing; increasing decreasing; decreasing decreasing; constant.
increasing; decreasing When average product increases, each employee is, on average, producing more output. Therefore, per-unit costs mustbe decreasing.
The variable cost curve represents the expenditures on ___________ to produce a given quantity of __________. output; output. fixed cost; input. labor; output. labor; input.
labor; output. Variable cost curve represents the expenditures on labor (a variable cost) to produce a given quantity of output in the short run. In the short run, labor is the only variable cost.
Examine the graph below. The intersection of the marginal product and average product curves occurs at the average product curve's minimum. maximum. intercept. minimum and intercept.
maximum. The intersection of the marginal product and average product curves occurs where the average product curve is at a maximum. When MP and AP are equal, the last unit of labor is neither dragging the average down or pushing it up. Therefore, they must be equal and average product must be at the maximum. This occurs at point B.
When the slope of the total product curve is increasing at an increasing rate, the marginal product is __________and ___________. positive; zero. positive;decreasing. negative;decreasing. positive; increasing.
positive; increasing. As the total product curve increases at an increasing rate, the marginal product curve is positive and increasing.
A particular firm produces bikes. This firm has a variable cost of $1,000 per worker. When the variable cost curve becomes vertical, it means that a firm can continue to hire labor but its production increases. decreases. remains the same. none of the above.
remains the same. When the variable cost curve is vertical, production will not increase, although costs continue to increase. The firm is producing the maximum output for its fixed inputs. It means that additional employees are inefficient because of congestion and overuse of the fixed inputs.
To derive the variable cost curve from the total product curve, you have to ______________ the axes and ________________ the number of workers (by, to, from) the wage. reverse; divide reverse; multiply. reverse; add. reverse; subtract.
reverse; multiply. Turning a product curve into a cost curve can be done by reversing the axes and stretching the graph by multiplying by the wage. You then get a graph that is a reflection of the total product curve.
Use the graph. When the marginal product of labor curve is above the average product of labor, the average product curve is ____________. rising. falling. constant. none of the above.
rising. When the marginal product of labor is above the average product of labor, the average product curve is rising. The economic meaning is that each additional unit of labor contributes more to total product than the average; therefore the average must be rising.
A firm pays salaries to some workers and wages to other workers. Salaries are a fixed amounts of money regardless of the number of hours worked; wages are paid based on hourly rates. Firms usually categorize salaries as fixed costs and wages as variable costs. salaries and wages as fixed costs. salaries and wages as variable costs. salaries as variable costs and wages as fixed costs.
salaries as fixed costs and wages as variable costs. Salaries are fixed because they are not related to the firm's output. Wages are variable because the firm can add employee's′ work hours (as overtime) or reduce employees' hours, depending on output levels.
At low levels of production, marginal costs tend to fall with each additional worker because firms are increasing plant capacity. teamwork and specialization help workers become more productive, thus causing MC to fall. the existing workers are getting in each other's way. none of the above.
teamwork and specialization help workers become more productive, thus causing MC to fall. At low production levels, each new worker adds more to marginal product than previous ones because all the workers are able to specialize and work as a team. When marginal product is increasing, marginal costs are falling.
The marginal cost of production is all of the following except the additional cost incurred when the firm changes its fixed costs. the additional cost incurred when the firm produces one more unit. the change in variable cost that results from a one-unit change in output. the change in total cost that results from a one-unit change in production.
the additional cost incurred when the firm changes its fixed costs. The marginal cost of production is the additional cost incurred when the firm produces an extra unit of output or the change in variable cost that results from a one unit change in output or production. Fixed costs do not change.
The economic information that marginal cost gives us is the value of all resources used in a production process. the amount by which total cost increases when output increases by one unit. the amount that fixed cost increases when output increases by one unit. the increment to profitability by adding another employee.
the amount by which total cost increases when output increases by one unit. Marginal cost is the increase in total cost from an additional unit of output.
To find the variable costs associated with a given level of output, the firm must determine both ____________ and ____________. the amount of labor; the wage rate the marginal costs of production; the amount of labor the amount of labor; the fixed labor costs the wage rate; the price of capital
the amount of labor; the wage rate To find the variable costs for a given level of output, multiply the number of workers need to produce the output by the price of those workers, or the wage rate.
Mathematically, marginal cost equals the change in variable cost divided by the change in total output. the change in total product divided by the change in variable cost. the change in variable cost minus the change in total product. the change in total product minus the change in variable cost.
the change in variable cost divided by the change in total output. Marginal cost measures the change in cost because of a one-unit increase in output. Since fixed costs do not change with a change in output, the change invariable costs measure the marginal costs.
The slope of the variable cost curve at any point is the marginal cost. the fixed cost. average variable cost. total cost.
the marginal cost. The slope is the change in variable cost at any point. This, then, is the marginal cost.
All of following are examples of inputs used in a restaurant except the kitchen. the wait staff. the tables. the owner's salary.
the owner's salary. All the choices except the owner's salary are direct inputs into the production of the restaurant's product. The salary is an accounting item; the owner's time would be an input.
Refer to the graph below. Marginal product becomes negative when the firm hires the first worker. the second worker. the fifth worker. the sixth worker.
the sixth worker. The marginal product is positive until the sixth worker. When the curve drops below the horizontal axis, the marginal product is negative. The sixth worker has caused total product to decrease.
If marginal cost is increasing, the slope of the variable cost curve must be decreasing. the slope of the variable cost curve must be increasing. the slope of the variable cost curve cannot give any information on the marginal cost curve. the slope of the variable cost curve is zero.
the slope of the variable cost curve must be increasing. At the inflection point on the variable cost curve, marginal cost is lowest. Variable cost increases at an increasing rate after the infelction point and marginal cost increases.
Examine the production schedule shown here. Marginal product begins to diminish at two employees. three employees. six employees. The marginal product is constant throughout.
three employees. Between the second and the fifth employee, the addition to total product by adding each employee is smaller than the addition to total product from the previous employee. This is the definition of "increasing at an decreasing rate," or diminishing marginal product.
Marginal product reaches a maximum in the range where total product is decreasing. total product is increasing at an increasing rate. total product is at its maximum. total product is negative.
total product is increasing at an increasing rate. Marginal product is the change in total product resulting from a one-unit change in labor. The change is greatest in the range where total product is increasing by the greatest amount or increasing at an increasing rate.
Average variable cost is total variable cost divided by total output. total output divided by total variable cost. total variable cost times total output. total cost minus total variable cost.
total variable cost divided by total output. Average variable cost is a per-unit measure. You must divide the total variable cost by the total output.
Examine the table below. At the maximum average product, the average variable cost is at a minimum. T/F
true At out put levels of 30 and 40, average product is at a maximum of 10 units per worker. Average cost at these twooutput levels is at a minimum of $100.
Changes in marginal costs are due to changes in productivity. T/F
true Costs are the mirror of productivity. When marginal product increases, marginal costs fall. At some point marginal product diminishes and marginal costs rise.
Marginal cost is equal to the wage divided by the marginal product of labor. T/F
true Marginal cost and the marginal product of labor are inversely related.
Decreasing marginal product first appears immediately after the maximum point on marginal product curve. T/F
true The marginal product curve rises when marginal product is increasing, reaches a maximum, then falls as marginal product decreases.
The variable cost curve has the same shape as an inverted total product curve. T/F
true The variable cost curve is the stretched version of an inverted total product curve. The axes are reversed.
Finding W / AP is the same as finding VC / TP, where AP is average product, VC is variable cost, and TP is total product. T/F
true The wage is a firm's variable cost, and its average product, by definition, is TP / L. W / AP is equivalent to VC / TP.
On the total product curve, total product is at a maximum when the firm hires five employees. T/F
true Total product is maximized at 30 VCRs when the firm hires five employees. After the fifth employee, output (total product) begins to fall.
According to the schedule, total product is maximized when the firm hires five employees. T/F
true Total product is the firm's production, in this case the number of VCRs. With five employees, this firm can produce 30 VCRs. After the fifth employee, production begins to fall.
Total product is the amount of output that a firm can produce using a given amount of inputs. using a given amount of outputs. by ignoring production costs. by not considering a firms's technology.
using a given amount of inputs. Toptal product is a firm's total product in any given time period. Inputs are resources, such as labor and natural resources, that are used to produce output.
The schedule shown here shows the total product when the factory size is fixed. when the quantity of labor employed is fixed. when all inputs are variable. when all inputs are fixed.
when the factory size is fixed. In the short run, most inputs are fixed (cannot be changed). However at least one input can be changed. The most common variable input is labor. In the schedule, the total product changes with the addition of each unit of labor.
All of the following about costs and production are true except the cost of production is the relationship between cost and productivity. cost and productivity are inversely related. when the productivity of workers is increasing, the cost of production is decreasing. when the productivity of workers is decreasing, the cost of production is decreasing.
when the productivity of workers is decreasing, the cost of production is decreasing. Since costs and productivity are mirrors of each other, this staemant cannot be true. If it were true, it would mean that less productive workers are also less costly.
When the total product curve is at its maximum, the slope of the total product curve is increasing decreasing zero vertical
zero When the total product reaches a maximum, it is no longer increasing and has not yet begun to decrease. Its slope at this point is zero. Since marginal product is the slope of the total product curve, then marginal product is zero. This point is where the marginal product curve crosses the horizontal axis.
What is the meaning of ΔTP/ΔL? ΔTP/ΔL is the Temporary Production Level of a company. ΔTP/ΔL means Total Profit is greater than Total Loss. ΔTP/ΔL is the marginal product. ΔTP/ΔL is symbolic for Total Product divided by Total Labor.
ΔTP/ΔL is the marginal product. The change in total product divided by the change in labor is the marginal product.
