Chapter 22 MICRO

When marginal cost is below average total​ cost, average total cost falls.

true

The wage rate divided by marginal product equals

marginal cost

The law of diminishing marginal returns is caused by

the existence of a fixed input that must be combined with increasing amounts of the variable input.

Paul​'s Chair Factory currently employs 50 ​workers, who produce 500 chairs. If Paul hires a 51st ​worker, output will rise to 550. What is the average product of the 51st ​worker?

A. 10.78 This is the correct answer. B. 50 C. 550 D. 0.98

The long run is any time period where

All inputs can be changed

Which of the graphs represents the correct relationship among the cost​ curves?

cost curve

In the short​ run, if a firm continues to add​ workers, marginal product must begin to diminish because

each worker has less capital to work with.

When the total product function begins to increase at a decreasing​ rate,

marginal product is falling. the law of diminishing returns has set in. marginal cost is rising. D. All of the above.

The​ long-run average cost curve

represents the various average costs attainable at the planning stage of the​ firm's decision making.

The shape of the​ short-run cost curves are the result of

the law of diminishing returns.

The short run is defined as

the period of time in which at least one factor of production is fixed.

Marginal cost​ ________ when marginal product​ ________.

​increases; decreases

A reason for diseconomies of scale is

costs of information and communication.

If the production of 25 sets of binoculars per day costs a firm​ $1,500.00 and the production of 26 sets of binoculars per day costs a firm​ $1,550.00, the marginal cost of producing 26 rather than 25 sets of binoculars per day is

$50.00

Assume a firm reduces its cost by shifting from paychecks to payroll​ cards, which are​ stored-value cards onto which the companies can download​ employees' wages and salaries electronically. If the only factor of production the firm varies in the short run is the number of hours worked by people already on its​ payroll, would the shift from paychecks to payroll cards reduce the​ firm's total fixed costs or its variable​ costs?

Since the wages paid to​ employees, the​ firm's variable labor​ input, have not​ changed, variable costs are unaffected. If the switch from issuing paychecks to payroll cards is​ cost-reducing, this change will cut its fixed costs of meeting its payrolls.

In the long run

all factors of production are variable

If total product is increasing at a decreasing​ rate, then marginal product is

decreasing

The law of diminishing marginal returns shows the relationship between

inputs and outputs for a firm in the short run.