Microeconomics Chapter 11

The table above gives the production function for Andrew's Garage. If labor is the variable input and number of cars serviced is the output, what is the marginal product of labor when the number of workers rises from 4 to 5? A. 4 B. 8 C. 6 D. 10

A. 4

The long run is a period of time in which A. a firm can adjust the quantity of any input. B. at least one input is fixed. C. the firm is guaranteed to be able to make a profit. D. the firm will not be able to make a profit.

A. a firm can adjust the quantity of any input.

Draw a total product of labor curve for Sal's Farm that exhibits diminishing marginal returns to labor. Tip: Make sure the curve begins at the origin.

As noted in the hint, the curve should begin at the origin. This makes sense because with no labor there can be no total product of labor. The curve should increase but at a decreasing rate; this illustrates the diminishing marginal product of labor, which means that every added unit of labor contributes a smaller amount to total production. Review Chapter 11; Section: The Production Function.

When drawing a total product curve, what do we put on the horizontal axis of the graph? A. Quantity of output B. Quantity of a variable input C. Quantity of all inputs D. Quantity of a fixed input

B. Quantity of a variable input

The table shows the cost information for Bonita's pet-sitting service, where quantity of output is the number of clients served per day. Think about the number you would put in the total cost column, and then answer this question. What is the marginal cost of increasing output from 2 clients to 3 clients? A. $10 B. $15 C. $57 D. $42

B. $15

The table shows the cost information for Bonita's pet-sitting service, where quantity of output is the number of clients served per day. Think about the number you would put in the total cost column, and then answer this question. What is the average total cost of serving 2 clients? A. $35 B. $56 C. $21 D. $16

B. $56

The additional quantity of output obtained from using one more unit of labor is known as A. short-run product curve. B. marginal product of labor. C. variable product curve. D. short-run production function.

B. marginal product of labor.

The relationship between a firm's inputs and its quantity of output is known as the A. technology quotient. B. production function. C. employment function. D. productivity quotient.

B. production function.

The diminishing returns of a variable input will account for A. the downward slope of average fixed cost. B. the upward slope of marginal cost. C. the decline in average total cost at low levels of output. D. the level of fixed cost.

B. the upward slope of marginal cost.

Which of the following will continually decrease as output increases? A. Total cost B. Average total cost C. Average fixed cost D. Marginal cost

C. Average fixed cost

What is on the horizontal axis when we draw a total cost curve? A. Quantity of variable inputs used B. Total cost C. Quantity of output D. Quantity of fixed inputs used

C. Quantity of output

The table above gives the production function for Andrew's Garage. If labor is the variable input and number of cars serviced is the output, which of the following statements is true? A. An increase in the number of workers hired decreases output. B. The marginal product curve is upward-sloping. C. There are diminishing returns to labor. D. The total product curve is downward-sloping.

C. There are diminishing returns to labor.

A variable cost A. is fixed regardless of quantity produced. B. arises from using a fixed input. C. depends on the quantity of output produced. D. is not included as part of total cost.

C. depends on the quantity of output produced.

An input whose quantity is fixed for a period of time is known as a A. productive input. B. variable input. C. fixed input. D. short-run input.

C. fixed input.

At quantities below the minimum-cost output, A. marginal cost is greater than average total cost and average total cost is rising. B. marginal cost is greater than average total cost and average total cost is falling. C. marginal cost is less than average total cost and average total cost is falling. D. marginal cost is equal to average total cost.

C. marginal cost is less than average total cost and average total cost is falling.

The change in total cost arising from producing one more unit of output is known as A. marginal product. B. average total cost. C. marginal cost. D. average variable cost.

C. marginal cost.

The table above gives the production function for Andrew's Garage. If labor is the variable input and number of cars serviced is the output, what is the marginal product of labor when the number of workers rises from 2 to 3? A. 6 B. 10 C. 4 D. 8

D. 8

The table shows the cost information for Bonita's pet-sitting service, where quantity of output is the number of clients served per day. Think about the numbers you would put in the total cost column, and then choose the one statement below that is TRUE. A. For Bonita's pet-sitting service, total cost is independent of the number of clients served. B. For Bonita's pet-sitting service, average fixed cost is continually increasing. C. For Bonita's pet-sitting service, there is no evidence of diminishing returns to a variable input. D. For output levels of three or more clients per day, marginal cost is increasing.

D. For output levels of three or more clients per day, marginal cost is increasing.

A firm may experience increasing returns to labor A. at quantities of production beyond the minimum-cost output. B. along the portion of the average total cost curve that is upward-sloping. C. along the portion of the average variable cost curve that is upward-sloping. D. at fairly low levels of output.

D. at fairly low levels of output.

As an organic tomato grower, you have fixed and variable costs as given in the table below. Create a graph that illustrates each of these cost curves: fixed cost (FC), variable cost (VC) and total cost (TC). Tip: Be sure to plot all points to generate the curves.

The fixed cost (FC) curve will be a horizontal line at the level of $500. Plot 500 at each of the given quantities and then label the curve. Similarly, plot the variable cost (VC) numbers at each of the corresponding quantities. Finally, total cost (TC) is the sum of FC and VC, as shown in the table. Here's a quick graphing tip: start at each point on the VC curve and count up 500 units (or 5 lines) and plot the TC point. That is the equivalent of adding the FC to the VC at each point on the graph. Be sure to label your curves. For further review, go to Chapter 11; Section: Two Key Concepts: Marginal Cost and Average Cost.