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