Microeconomics: Technology, Production, and Costs

The law of diminishing marginal returns

B) applies only in the short run.

The president of Toyota's Georgetown plant was quoted as saying, "Demand for high volumes saps your energy. Over a period of time, it eroded our focus [and] thinned out the expertise and knowledge we painstakingly built up over the years." This quote suggests that

B) as Toyota expanded its capacity, it experienced diseconomies of scale.

If the marginal cost curve is below the average variable cost curve, then

B) average variable cost is decreasing.

Over the past twenty years, the number of small family farms has fallen significantly and in their place there are fewer, but larger, farms owned by corporations. Which of the following best explains this trend?

B) economies of scale in farming

If fixed costs do not change, then marginal cost

B) equals the change in variable cost divided by the change in output

Bill owns "Bill's Home of Blues" a store that specializes in selling CDs and DVDs of blues musicians of the 1960s and 1970s. Bill took out a loan from his bank to pay for his store and its initial inventory. Bill pays the bank $900 per week for his loan. The $900 bank payment

B) is a fixed cost

The law of diminishing marginal returns states

B) that at some point, adding more of a variable input to a given amount of a fixed input will cause the marginal product of the variable input to decline

If another worker adds 9 units of output to a group of workers who had an average product of 7 units, then the average product of labor

B) will increase.

Which of the following equations is correct?

C) AFC + AVC = ATC

Which of the following explains why the marginal cost curve has a U shape?

C) Initially, the marginal product of labor rises, then falls.

Long-run cost curves are U-shaped because

C) of economies and diseconomies of scale

Increases in the marginal product of labor result from

C) the division of labor and specialization.

When the marginal product of labor rises, ceteris paribus,

C) the marginal cost of production falls.

Diminishing marginal product of labor occurs when adding another unit of labor

D) decreases output by an amount smaller than the output added by the previous unit of labor.

The marginal product of labor is defined as

D) the change in output that a firm produces as a result of hiring one more worker.

Which of the following costs will not change as output changes?

D) total fixed cost

which of the following statements best describes the economic short run?

It is a period during which at least one of the firms inputs is fixed.

The processes a firm uses to turn inputs into outputs of goods and services is called?

a) Technology

FIrm has successfully adopted a positive technological change when?

a) it can produce more output using the same inputs

A characteristic of a long run is?

all inputs can be varied

Which of the following statements are true?

c) Total cost=fixed costs+variable costs

How to calculate Marginal Cost

change in total cost / change in quantity

Marginal cost is equal to the

change in total cost divided by the change in output

How to find marginal product

differences between two outputs

If fixed costs do not change, then marginal cost

equals the change in variable cost divided by the change in output.

As a firm hires more labor in the short run, the

extra output of another worker may rise at first, but eventually must fall.

In the short run, if marginal product is at its maximum, then

marginal cost is at its minimum.

How to find average product of labor

output divided by the number of workers

Not a source of technological advancement for a producer

outsourcing some aspect of production

In the long run which of the following is true?

there are no fixed costs