Unit 3 Exam

The average total cost of producing 3 units of output is?

$16

If the average variable cost of producing 4 burritos is $20 and the average variable cost of producing 5 burritos is $25, than the marginal cost of increasing output from 4 to 5 burritos is

$45

The marginal cost of producing the 4th output is?

$6

The chart shows the number of workers and the quantity of burgers produced in one hour. The marginal product of the sixth worker is?

15

The Law of Diminishing Marginal Returns first occurs with which worker?

3rd

At the point of price 0A, economic profits are

ABKH

Farmer John is a profit-maximizing firm currently experiencing short-run losses. Under which of the following conditions should Farmer John shut down production?

AR is less than AVC

In the short run, the firm will stop production when the price falls below

D

In a perfectly competitive market, the price is equal to

MRDARP (marginal revenue, demand, average revenue, price)

In the short run, a perfectly competitive firm will make an economic profit if

P>ATC

Fixed costs are

any cost which do not change when the firm changes its output

Marginal revenue is the

change in total revenue associated with the sale of one more unit of output

At the profit-maximizing output, the firm will realize

economic profit of HJEF

The short-run supply curve for a firm in a perfectly competitive industry is

its marginal cost curve above the minimum point of its average variable cost curve

If a firm's average total cost decreases as the firm increases its output, the firm's marginal cost must be

less than the average total cost

Marginal product

may initially increase, then diminish, and ultimately becomes negative

If the MR is greater than MC for a firm operating in a perfectly competitive market, then the firm should

produce more of the good to maximize profit

A constant-cost, perfectly competitive widget industry is in long-run equilibrium. A decrease in the price of gadgets, a substitute for widgets, will most likely result in

short-run losses for widget producers, followed by the exit of some firms

The vertical distance between ATC and AVC reflects

the average fixed cost at each level of output (AFC)

Marginal product is

the increase in total output attributable to the employment of one more worker