AGEC 1113 Spring 2016 Test 2 A

Q: If MRP < MFC (and MRP is decreasing), the rational producer will:

reduce input usage one unit at a time until they are equal

Q: If the flower business is perfectly competitive:

A. There will be more than one flower business in the community B. Consumers will not care which flower business they purchase from C. There will be no laws that prevent new firms from entering the business

Q: The MR for Snobs greenhouse represents:

A. Additional revenue from producing one more flower B. The slope of the Total Revenue Curve C. The price flowers

Q: Marginal Cost is:

the additional cost of producing one more unit of output

Q: When would Marginal revenue (MR) be equal to Marginal Revenue Product(MRP)?

If it takes exactly 1 unit of input to produce 1 unit of output

Q: Economic Profits are equal to:

TR - accounting costs - opportunity costs

Q: If P(y) < Min ATC:

Negative economic profits are being earned

Q: For a perfectly competitive firm, prices:

For a perfectly competitive firm, prices:

Q: An isocost represents all combinations of:

Two variable inputs that can be purchased for a given level of expenditure

Q: Diminishing marginal returns to individual inputs in the production process results in:

A Isoquants that are curved and convex to the origin B. TPP curves that eventually begin to increase at a decreasing rate C. Total cost curves that eventually increase at an increasing rate

question

Maximum profit can be found by:

answer

Setting MRP=MFC

question

If MRP < MFC (and MRP is decreasing), the rational producer will:

answer

reduce input usage one unit at a time until they are equal

question

MRP is equal to:

answer

The rate of change in TRP

question

What would happen to the profit maximizing number of flowers if the price of the variable input P(x) increased significantly (ceteris paribus)?

answer

it would decrease

question

If the flower business is perfectly competitive:

answer

A. There will be more than one flower business in the community
B. Consumers will not care which flower business they purchase from
C. There will be no laws that prevent new firms from entering the business

question

The MR for Snobs greenhouse represents:

answer

A. Additional revenue from producing one more flower
B. The slope of the Total Revenue Curve
C. The price flowers

question

Marginal Cost is:

answer

the additional cost of producing one more unit of output

question

When would Marginal revenue (MR) be equal to Marginal Revenue Product(MRP)?

answer

If it takes exactly 1 unit of input to produce 1 unit of output

question

Economic Profits are equal to:

answer

TR - accounting costs - opportunity costs

question

If P(y) < Min ATC:

answer

Negative economic profits are being earned

question

For a perfectly competitive firm, prices:

answer

For a perfectly competitive firm, prices:

question

Which of these is a characteristic of Perfect competition?

answer

Perfect information

question

An isocost represents all combinations of:

answer

Two variable inputs that can be purchased for a given level of expenditure

question

If labor becomes relatively more expensive than capital:

answer

Less labor will be used

question

If the price of the input graphed on the horizontal axis of a two-input graph decreases, then the isocost line will:

answer

Become less steep

question

Diminishing marginal returns to individual inputs in the production process results in:

answer

A Isoquants that are curved and convex to the origin
B. TPP curves that eventually begin to increase at a decreasing rate
C. Total cost curves that eventually increase at an increasing rate

question

A veterinarian who earns exactly zero economic profits:

answer

Is earning exactly what all of her resources are worth and could not do any better

question

When a producer sees a decrease in the price of the output they are producing (ceteris peribus) they should:

answer

Use less of the input and produce less output

question

An oil well on a fixed piece of land will likely show:

answer

Increasing average costs at higher levels of output

question

Red Trucks and Blue Trucks that are otherwise exactly the same would be

answer

Perfect substitutes in a production process that needed trucks

question

In order to maximize profits, a farm manager should:

answer

Weight the benefits vs. the costs of all major decisions

question

Relative prices determine:

answer

A.Optimal Input use decisions
B. Optimal Output level decisions
C. Optimal Input mix decisions

question

If the price of one imperfect substitute input increases relative to the other, and the producer wants to stay on the same isoquant:

answer

The producer will use less of the input that increased in price and more of the other

question

Nuts and bolts in most situations would be:

answer

Perfect complements

question

During the current election cycle there is a lot of talk about increasing the minimum wage. If laws are passed that increase wages above market clearing levels:

answer

Businesses will substitute out of labor inputs and use more capital

question

To find the optimal combination of two variable inputs to use we need:

answer

Both the slope of the isoquant and the slope of the isocost

question

A "constant cost" cost structure would likely result when

answer

Nearly all costs are variable

question

If two perfect substitutes are graphed with X2 on the vertical axis and X1 on the horizontal axis, and the negative slope of the Isocost line is more steep than the negative slope of the MRTS, then:

answer

The profit maximizing producer will use all X2 and no X1

question

For a given "isocost" line, or level of expenditure, producers:

answer

Strive to reach the highest isoquant possible

1 of 29

question

Maximum profit can be found by:

answer

Setting MRP=MFC

question

If MRP < MFC (and MRP is decreasing), the rational producer will:

answer

reduce input usage one unit at a time until they are equal

question

MRP is equal to:

answer

The rate of change in TRP

question

What would happen to the profit maximizing number of flowers if the price of the variable input P(x) increased significantly (ceteris paribus)?

answer

it would decrease

question

If the flower business is perfectly competitive:

answer

question

The MR for Snobs greenhouse represents:

answer

A. Additional revenue from producing one more flower
B. The slope of the Total Revenue Curve
C. The price flowers

question

Marginal Cost is:

answer

the additional cost of producing one more unit of output

question

When would Marginal revenue (MR) be equal to Marginal Revenue Product(MRP)?

answer

If it takes exactly 1 unit of input to produce 1 unit of output

question

Economic Profits are equal to:

answer

TR - accounting costs - opportunity costs

question

If P(y) < Min ATC:

answer

Negative economic profits are being earned

question

For a perfectly competitive firm, prices:

answer

For a perfectly competitive firm, prices:

question

Which of these is a characteristic of Perfect competition?

answer

Perfect information

question

An isocost represents all combinations of:

answer

Two variable inputs that can be purchased for a given level of expenditure

question

If labor becomes relatively more expensive than capital:

answer

Less labor will be used

question

If the price of the input graphed on the horizontal axis of a two-input graph decreases, then the isocost line will:

answer

Become less steep

question

Diminishing marginal returns to individual inputs in the production process results in:

answer

A Isoquants that are curved and convex to the origin
B. TPP curves that eventually begin to increase at a decreasing rate
C. Total cost curves that eventually increase at an increasing rate

question

A veterinarian who earns exactly zero economic profits:

answer

Is earning exactly what all of her resources are worth and could not do any better

question

When a producer sees a decrease in the price of the output they are producing (ceteris peribus) they should:

answer

Use less of the input and produce less output

question

An oil well on a fixed piece of land will likely show:

answer

Increasing average costs at higher levels of output

question

Red Trucks and Blue Trucks that are otherwise exactly the same would be

answer

Perfect substitutes in a production process that needed trucks

question

In order to maximize profits, a farm manager should:

answer

Weight the benefits vs. the costs of all major decisions

question

Relative prices determine:

answer

A.Optimal Input use decisions
B. Optimal Output level decisions
C. Optimal Input mix decisions

question

If the price of one imperfect substitute input increases relative to the other, and the producer wants to stay on the same isoquant:

answer

The producer will use less of the input that increased in price and more of the other

question

Nuts and bolts in most situations would be:

answer

Perfect complements

question

During the current election cycle there is a lot of talk about increasing the minimum wage. If laws are passed that increase wages above market clearing levels:

answer

Businesses will substitute out of labor inputs and use more capital

question

To find the optimal combination of two variable inputs to use we need:

answer

Both the slope of the isoquant and the slope of the isocost

question

A "constant cost" cost structure would likely result when

answer

Nearly all costs are variable

question

If two perfect substitutes are graphed with X2 on the vertical axis and X1 on the horizontal axis, and the negative slope of the Isocost line is more steep than the negative slope of the MRTS, then:

answer

The profit maximizing producer will use all X2 and no X1

question

For a given "isocost" line, or level of expenditure, producers:

answer

Strive to reach the highest isoquant possible

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