Mirco Ch11
When the output level is 100 units average fixed cost is
$8.
The processes a firm uses to turn inputs into outputs of goods and services is called
technology.
Diminishing marginal productivity sets in after
the 2nd worker is hired.
The marginal product of labor is defined as
the change in output that a firm produces as a result of hiring one more worker.
Increases in the marginal product of labor result from
the division of labor and specialization.
When output level is 100, what is the total cost of production?
$2,000
What is the average product of labor when the farm hires 5 workers?
10.8 pounds
The marginal product of the 3rd worker is
15.
Diminishing marginal returns sets in when the ________ worker is hired.
3rd
What is the marginal product of the 4th worker?
5 pounds
Which of the following equations is correct?
AFC + AVC = ATC
Which of the following statements is true?
As output increases, average fixed cost becomes smaller and smaller.
Which of the following is a reason why a firm would experience diseconomies of scale?
As the size of the firm increases it becomes more difficult to coordinate the operations
Which of the following statements explains the difference between diminishing returns and diseconomies of scale?
Diminishing returns apply only to the short run; diseconomies of scale apply only
Identify the curves in the diagram.
E = marginal cost curve; F = average total cost curve; G = average variable cost
Which of the following statements correctly describes the curves in the figure?
The marginal product of labor curve is represented by curve Band the average
Which of the following statements is true?
Total cost = fixed cost + variable cost.
The explicit cost of production is also called
accounting cost.
Marginal cost is the
additional cost of producing an additional unit of output.
A characteristic of the long run is
all inputs can be varied.
A curve that shows all the combinations of two inputs, such as labor and capital, that will produce the same level of output is called
an isoquant.
If the marginal cost curve is below the average variable cost curve, then
average variable cost is decreasing.
An isocost line shows
combinations of two inputs that result in the same total cost for a firm.
When a firm's long-run average cost curve is horizontal for a range of output, then that range of production displays
constant returns to scale.
If, when a firm doubles all its inputs, its average cost of production increases, then production displays
diseconomies of scale.
If, when a firm doubles all its inputs, its average cost of production decreases, then production displays
economies of scale.
For what quantity of labor does production start to display diminishing returns?
for more than 4 units of labor
The average product of the 4th worker
is 17.
A firm's expansion path
is a curve that shows a firm's cost-minimizing combination of inputs for every level
If the average variable cost curve is above the marginal cost curve, then
marginal costs can be either increasing or decreasing.
The rate at which a firm is able to substitute one input for another while keeping the level of output constant is called the
marginal rate of technical substitution.
If a producer is not able to expand its plant capacity immediately, it is
operating in the short run.
Which of the following are implicit costs for a typical firm?
opportunity costs of capital owned and used by the firm
The relationship between the inputs employed by a firm and the maximum output that it can produce with those inputs is the firm's
production function.
The production function shows
the maximum output that can be produced from a set of inputs.
The minimum efficient scale is
the smallest level of operation where long-run average costs are lowest.
Average total cost is
total cost divided by the quantity of output produced.
Which of the following is typically considered a fixed cost by academic book publishers but a variable cost by companies that print books?
wages and salaries
