MicroeconomicsChpt11
Which of the following describes how output changes in the short run? Because of specialization and the division of labor, as more workers are hired
) output will first increase at an increasing rate, then output will increase at a decreasing rate.
If 11 workers can produce 53 units of output while 12 workers can produce 56 units of output, what is the marginal product of the 12th worker?
3
Which of the following equations is incorrect?
ATC = AVC - AFC
Which of the following statements is true
As output increases, average fixed cost becomes smaller and smaller
In the short run, why does a production function eventually display diminishing returns to labor?
As the number of workers increases eventually the gains from the division of labor and specialization are used up
Which of the following explains why the marginal cost curve has a U shape?
Initially, the marginal product of labor rises, then falls.
Which of the following is true at the output level where average total cost is at its minimum
Marginal cost equals average total cost
Which of the following statements is false?
Marginal cost will equal average total cost when marginal cost is at its lowest point
Which of the following statements is true?
The average product of labor is at its maximum when the average product of labor equals the marginal product of labor.
Jill Johnson owns a pizzeria. She currently produces 10,000 pizzas per month at a total cost of $500. If she produced one more pizza her total cost rises to $500.11. What does this tell us about Jill's marginal cost of producing pizzas?
The marginal cost of producing pizzas is rising.
) After Suzie, owner of Suzie's Sweet Shop, hires her 8th worker the average product of labor declines. Which of the following statements must be true?
The marginal product of the 8th worker is less than the average product of labor before the 8th worker was hired.
Which of the following statements is false?
When marginal cost equals average total cost, average total cost is at its highest value.
Akio Morita, chairman of Sony, used a curve to determine the price of radios his company sold. This curve was
an average total cost curve
The law of diminishing marginal returns
applies only in the short run
In a diagram showing the average total cost and average variable cost curves, the minimum point of the average total cost is
at a larger level of output than the minimum point of the average variable cost.
Diminishing marginal product of labor occurs when adding another unit of labor
changes output by an amount smaller than the output added by the previous unit of labor
Marginal cost is calculated for a particular increase in output by
dividing the change in total cost by the change in output
If production displays increasing marginal returns, then
each new worker hired adds more to output than previous hires
Average fixed cost is equal to
fixed cost divided by the quantity of output produced
The change in a firm's total cost from producing one more unit of a good or service is the firm's
marginal cost of production.
If marginal product is greater than average product, then
marginal product could either be increasing or decreasing
) An avocado orchard employs five full-time workers. Currently, the average product of labor is 120 pounds of avocados per day. The orchard hires a 6th full-time worker and his marginal product is 150 pounds of avocados. The average product of the six workers will now be
more than 120 pounds
All of the following cost curves are U-shaped except one. Which curve is not U-shaped?
the average fixed cost curve
The total output produced by a firm divided by the quantity of workers employed by the firm is the definition of
the average product of labor.
The marginal product of labor is defined as
the change in output that a firm produces as a result of hiring one more worker
The change in a firm's total cost from producing one more unit of a good or service is
the definition of marginal cost
As output increases
the difference between average total cost and average variable cost decreases
In his book The Wealth of Nations, Adam Smith employed the example of a pin factory in order to explain what economic concept?
the division of labor
Increases in the marginal product of labor result from
the division of labor and specialization
The shape of the average total cost curve is determined by the shape of
the marginal cost curve.
When the marginal product of labor rises
the marginal cost of production falls.
Sam Lewis owns a firm in New York City's garment district. If Sam keeps adding workers to use the same number of sewing machines, eventually the workplace will become so crowded that workers will get in each other's way. At this point
the marginal product of labor in Sam's business would be negative and his total output would decrease.
Gertrude Stork's Chocolate Shoppe normally employs 4 workers. When the Chocolate Shoppe hired a 5th worker the Shoppe's total output decreased. Therefore,
the marginal product of the 5th worker is negative
Average total cost is equal to
total cost divided by the level of output
The division of labor and specialization explain
why the marginal product of labor rises as a firm hires its first units of labor
Average fixed cost can be calculated using any of the formulas below except
Δ(TC - VC)/ΔQ
) The marginal product of labor is calculated using the formula
ΔQ/ΔL.
