Ag Economics Exam 2
T or F: A production function is the particular set or combination of resources used to produce a given level of output.
True
T or F: An isoquant is a curve that shows all combinations of the two variable inputs that can be used to produce a given quantity of output.
True
T or F: As the TPP curve was the graphical representation of the one variable input production function, the isoquant is the graphical representation of the two variable input production function.
True
T or F: Capital is the physical or tangible resources used to aid or enhance production.
True
T or F: Labor is the physical act or effort of performing a task by humans.
True
T or F: Land is defined by all its physical characteristics used to yield a product, including the soil and the natural environment within which it is contained.
True
T or F: Production is a process by which resources are transformed into products and serves that are usable by consumers.
True
T or F: The Expansion Path shows the revenue (and profit) maximizing proportions of Y1 and Y2 as the firm expands or contracts.
True
T or F: The Marginal Rate of Product Substitution measures the differing rates at which either product will substitute for the other along the production possibilities curve.
True
T or F: The isocost curve identifies all the combinations of the two given inputs that can be afforded given a specific expenditure level to produce a given level of output.
True
T or F: The optimal combination of two products is to produce where the Marginal Rate of Product Substitution is equal to the ratio of the output prices.
True
T or F: a resource is a factor that can be used to produce a product that can satisfy a human want or desire.
True
The lowest point on the firm level supply curve is
Where marginal cost interesects average variable cost, the sit-down point
The form of resource (input) substitution where one input can be exactly substituted for another in production is known as
perfect substitutes
Based on Table 1, what is the Marginal Rate of Product Substitution in cell H (between choice C and D)?
0.150
Based on Table 1, what is the Marginal Rate of Product Substitution in cell J (between choice D and E)?
0.350
The line showing the revenue and profit maximizing proportions of two products as the firm increases or decreases its level of output is referred to as the
Exapansion Path
T or F: An isoquant is the graphical equivalent in production economics to what the budget line is to consumption economics.
False
T or F: Similar to the budget line in consumer economics, the isoquant identifies all the combinations of the two given inputs that can be afforded to produce a given level of output.
False
T or F: Stage II is an irrational stage of production.
False
T or F: The Budget Line shows all possible combinations of two products sold that will bring the same total revenue.
False
T or F: The Isoquant shows all possible combinations of two products that can be produced given the set of resources in the firm's control.
False
T or F: The boundary between stages I and II of production occurs where total physical product is maximized and marginal physical product has decreased to zero.
False
T or F: The boundary between stages II and III of production occurs where average physical product is maximized and marginal physical product is equal to average physical product
False
The government fixing the price of a commodity at some level above the equilibrium price will result in a
Surplus
Assuming two points on a supply curve where the first point is represented by (P1 = 1; Q1 = 100) and the second point is represented by (P2 = 2; Q2 = 200), the price elasticity of supply is
1.0
Based on Table 3 and your answer to question 61, what is the amount of Profit at the profit maximizing output level when Marginal Revenue is 70?
100
Based on Table 3, what is the Average Fixed Cost in cell AA?
100
Based on Table 3, what is the Total Fixed Cost in cell F?
100
Assuming two points on a supply curve where the first point is represented by (P1 = 1.5; Q1 = 50) and the second point is represented by (P2 = 2.5; Q2 = 150), the price elasticity of supply is
2.0
Based on Table 3, what is the Total Cost in cell M?
215
Based on Table 3, what is the Average Fixed Cost in cell AD?
25
Based on Table 3, what is the Marginal Cost in cell AT?
25
Based on Table 3, what is the Marginal Cost in cell AU?
25
Based on Table 1, what is the Total Revenue in cell M?
254,000
Based on Table 1, what is the Total Revenue in cell L?
260,000
Based on Table 1, what is the Total Revenue in cell K?
292,000
Based on Table 3, what is the Average Variable Cost in cell V?
35
Based on Table 3 and your answer to question 61, what is the Total Cost at the profit maximizing output level when Marginal Revenue is 70?
390
Based on Table 3 and your answer to question 61, what is the Total Revenue at the profit maximizing output level when Marginal Revenue is 70?
490
Based on Table 3, what is the Average Total Cost in cell AN?
55
Based on Table 3, what is the Average Total Cost in cell AM?
60
Based on Table 3, what is the profit maximizing quantity (Output Level) when Marginal Revenue is 70?
7
A Supply Elasticity that is greater than 1.0 is referred to as
Elastic
The form of resource (input) substitution where larger and larger amounts of a second variable (input) are required to replace equal incremental reductions of the first resource (input) while maintaining the same level of output is known as
Imperfect substitutes
A Supply Elasticity that is less than 1.0 is referred to as
Inelastic
The line which shows the amounts of two resources that can be bought for a given amount of money is reffered to as the
Isocost Line
The line showing all combinations of inputs that result in the same quantity of an output is referred to as the
Isoquant
The line representing all possible combinations of two products sold that will bring the same total revenue is referred to as the
Isorevenue Line
Minimizing the resource cost of producing a particular commodity is referred to as the
Least-Cost Combination
The "shut down point" is where
Marginal Cost Intersects Average Variable Cost
The slope of the production possibilities curve is referred to as the
Marginal rate of product substitution
The slope of an isoquant is known as the
Marginal rate of substitution
Based on Table 3, what is the Average Variable Cost in cell S?
None of the above
Based on Table 3, what is the lowest Marginal Cost?
None of the above
The form of resource (input) substition where two inputs can only be used in production in a fixed ration and cannot be substituted for one another is known as
Perfect complements
The full range of feasible allocations for a firm is reffered to as its
Production Possibilities
The technical relationship that occurs when one input can be subsitituted for another in production while yielding the same level of output
Resource substitution
The government fixing the price of a commodity at some level below the equilibrium price will result in a
Shortage
Based on Figure 1, which curve is the Marginal Cost Curve?
line A
Based on Figure 1, which curve is the Average Total Cost Curve?
line B
Based on Figure 1, which curve is the Average Variable Cost Curve?
line C
Based on Figure 1, which curve best represents the Supply Curve?
line D
Based on Figure 1, which curve is the Average Fixed Cost Curve?
line D
