Production Economics Tests

A purely competitive seller is:

A "price taker"

The long run production period is defined as

A period sufficiently long as to allow all inputs to be varied

In stage II of cubic functions:

All of these are true

A movement from lower to higher isoquants indicates:

An increase in the level of production

Fixed Cost is

Any cost which does not change when the firm changes its output

The basic difference between the short run and the long run is that:

At least one resource is fixed in the short run, while all resources are variable in the long run

In cubic production functions, Stage I is characterized by:

Average product increasing

In stage III of cubic production functions:

Average product is diminishing but is greater than zero

If the total product curve becomes progressively less steep as additional units of the variable input are used, but is still positive:

Average product may be rising or falling

If the slope of the total product curve increases as additional units of the variable input are used, this indicates:

The marginal product of the variable input is rising

If production occurs where marginal product is zero:

Total product is maximized

The optimum stage of production in terms of efficiency and unit costs occurs:

in stage II

Production is defined as any activity which creates

output

The demand schedule or curve confronted by the individual purely competitive firm is:

perfectly elastic

The demand curve in a purely competitive industry is _______, while the demand curve to a single firm in an industry is _______.

perfectly elastic; downsloping

An isoquant indicates:

the combinations of t inputs that will produce the same output

The marginal rate of technical substitution is ;

the slope of an isoquant

Isoquants slope downward from left to right because:

Inputs are substitutes

Suppose the production function is Q=14x+5x^2-x^3 The expression 14+10x-3x^2 is the:

Marginal Product

The change in total production, which results from one additional unit of the variable input is called the

Marginal Product

Which of the following is a characteristic of a purely competitive sellers demand curve?

Price and marginal revenue are equal at all levels of output

On a per unit basis economic profit can be determined as the difference between:

Product price and average total cost

The relationship between inputs of raw materials, labor, land, capital, and managerial skills and output can be expressed as

Production Function

An industry comprised of a very large number of sellers producing a standardized product is known as

Pure Competition

The ________ is the period of time in which at least one input is fixed; while the ________ is a period of time which all inputs are variable.

Short term analysis; Long term analysis

An isocost indicates:

The combinations of two inputs that can be purchased with a given expenditure

The locus of points of optimum input combinations is called:

The expansion path

Suppose the price of labor falls (horizontal axis). Which of the following would not happen

The isocost curve would rotate to the right

The change in total output resulting from increasing the variable input by one unit is called:

The marginal product of the variable input

A short term production function includes

Both variable and fixed inputs

Marginal Cost is the

Change is total cost that results from producing one more unit of output

Suppose that the quantity of all inputs increases by 30% while the output increases by 30%. This is a case of:

Constant returns to scale

Which of the following is not a true statement concerning the effect of a given technological advance?

Costs always rise because although less of some inputs may be required, more of other inputs are required

The MR=MC rule can be restated for a purely competitive seller as P=MC because:

Each additional unit of output adds exactly its price to total revenue.