ECON Chapter 11

What is the short run?

A period of time during which at least one of the firm's input is fixed

Which costs are affected by the level of output produced?

Variable costs

What is the additional output that a firm produces as a result of hiring one more worker called?

Marginal product of labor

Refer to the graph below. From the origin up until point A,

output increases at a increasing rate

Refer to the graph below. How much is the value of total fixed cost?

$2400

Refer to the table below. What is the marginal cost of producing the 200th pizza?

$3.25

Refer to the table below. What is the marginal cost of producing the 640th pizza

$43.33

What does the term "spreading the overhead" refer to?

NOT reducing total cost by selling more output

Which of the following is known as the highest-valued alternative that must be given up in order to engage in an activity?

Opportunity Cost

Refer to the table below. What is the average total cost of producing 550 pizzas?

$5.00

Refer to the graph below. Based on the relationship between average total cost and marginal cost, which of the curves below appears to be average total cost?

Curve 2

Refer to the graph below. Based on the relationship between marginal product and average product, which curve appears to be average product?

Curve 2

Refer to the graph below. At any level of output, what is the vertical distance between Curve 2 and Curve 3 equal to

Curve 4

Refer to the graph below. In moving along the curve from point A to point B, which of the following is more likely to occur?

Diminishing returns

Which of the following are sometimes called accounting costs?

Explicit cost

Which of the following is true? i.Total cost = fixed cost + variable cost ii.Total cost = explicit costs + implicit costs iii.Economic cost = accounting cost + implicit costs

I, II, and III

Which of the following statements is correct?

In the long run, all costs are variable

Refer to the graph below. For a certain output range (or quantity of pizzas produced per day), marginal cost is greater than average cost. What is this output range?

Output range greater than about 525 pizzas per day

The term used to describe a change in the ability of a firm to produce a given level of output with a given level of inputs is called___.

Technological change

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

Technology

Fill in the blanks. When graphing a conventional short-run production function, we place____ on the horizontal axis and ____on the vertical axis.

The variable input; output

If the number of people in a publishing company does not go up or down with the quantity of books it publishes, then how should we categorize the salaries and benefits paid to these employees?

They are part of fixed cost

Refer to the graph below. What does Curve 4 represent?

Average fixed cost

The following cost measures reach their minimum points when they are equal to the value of marginal cost, except one. Which cost measure is the exception?

Average fixed cost

What do we obtain by dividing the fixed cost by the quantity of output produced?

Average fixed cost

Which of the following refers to the total output produced by a firm divided by the quantity of workers?

Average product of labor

What cost measure is equal to AFC + AVC?

Average total cost

Refer to the graphs below. Which graph is representative of a typical average total cost curve?

NOT A OR D

Refer to the table below. Which of the following costs are implicit costs?

NOT all of the above or lease payments

What happens to the difference between average variable cost and average total cost as the level of output increases?

The difference decreases

What is the production function?

The relationship between the inputs employed by a firm and the maximum output it can produce with those inputs

Refer to the table below. When do diminishing returns in the production of pizzas start?

When the third worker is hired

Which of the following statements about the relationship between marginal product of labor and average product of labor is correct?

Whenever the marginal product of labor is greater than the average product of labor, the average product of labor must be increasing.