ECO Chapter 7 assignment
In Figure 7-7 at 100 units, AFC equals
10
In Figure 7-2, average cost at 500 units of output equals
8
In Table 7-1, the marginal physical product of labor after the addition of the fourth worker is
8
The optimum quantity of an input occurs when
Marginal revenue product equals input price
Marginal physical product can tell a producer
how much the last input added to the total amount of production.
Total fixed cost
is constant at all levels of output.
When economies of scale exist,
production costs per unit decline as output expands.
The short run is the time period during which
some of the firm's input decisions are constrained by previous commitments.
Average cost curves decline because
fixed cost is spread out over larger amounts of production.
Some costs cannot be varied no matter how long the period in question. These are called
fixed costs
A factory produces 1,000 radios a year, AVC = $10 and TFC = $5,000. The factory's TC
equals $15,000
In the short run,
firms have relatively little opportunity to change production processes.
If doubling the quantity of inputs more than doubles the quantity of outputs, the firm is experiencing
a. increasing returns to scale.
Marginal cost
a. is the cost of the marginal unit of output. c. is the increase in total cost resulting from production of one additional unit of output. d. and the average cost curve are U-shaped.
The long-run average cost curve
a. shows the lowest possible short-run AC corresponding to each output level. b. is a composite of short-run AC curves. c. depends on the firm's planning horizon.
The marginal physical product of an input is the
addition to output from using one more unit of an input.
In the long run,
all of the firm's input quantities are variable