question
The short run is the time period during which
answer
some of the firm's input decisions are constrained by previous commitments.
question
In the long run,
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all of the firm's input quantities are variable.
question
Which of the following observations is true?
answer
In the long run, more costs become variable.
question
The case of production with a single variable input is analogous to
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a controlled laboratory experiment in which the scientist permits one variable to change at a time.
question
The total physical product of an input is the same thing as its
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output
question
The marginal physical product of an input is the
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addition to output from using one more unit of an input.
question
In which zone does the total physical product reach it maximum value?
answer
Diminishing marginal return
question
A total product curve shows the
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relationship between units of inputs and total output.
question
Which of the following statements is equivalent to the law of diminishing marginal returns?
answer
Too many cooks spoil the broth.
question
The marginal revenue product of an hour of labor used in steel production is equal to
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its marginal physical product times the price of steel.
question
The rule for the optimal use of any input says that
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when MRP is greater than price, it pays to expand resource use.
question
Which of the following indicates an input is being overused relative to the optimal level?
answer
MRP < P of input.
question
The optimum quantity of an input occurs when
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marginal revenue product equals input price.
question
To determine total cost, the businessperson must know
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input quantity and input price.
question
On Naomi's pig farm, Naomi hires all the labor used, grows all the grain fed to the pigs, and owns the barn. The costs used to calculate the total cost curve include
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the cost of labor, the cost of growing grain, and the opportunity cost of the barn.
question
Which of the following is a fixed cost?
answer
mortgage on the building
question
Which of the following is a variable cost for an airline?
answer
jet fuel
question
The typical average cost curve
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first declines to a minimum and then increases as output increases.
question
In the typical AC curve, the downward-sloping part is attributable to
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spreading fixed costs over larger outputs and increasing returns to the variable inputs.
question
When economies of scale exist,
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production costs per unit decline as output expands.
question
A firm's production process shows constant returns to scale. It can produce 5,000 widgets at a total cost of $2,500 and 10,000 widgets at an average cost of
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$0.50.
question
If doubling the quantity of inputs more than doubles the quantity of outputs, the firm is experiencing
answer
increasing returns to scale.
question
If a firm increases inputs by 15 percent and output increases by 12.5 percent, the firm is experiencing
answer
decreasing returns to scale.
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