question
A cost that does not depend on the quantity of output produced is called a:
answer
fixed cost.
question
Diminishing returns to an input occur:
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when some inputs are fixed and some are variable.
question
(Figure: The Marginal Product of Labor) Look at the figure The Marginal Product of Labor. The total product for three workers is:
answer
51 bushels.
question
(Table: Production Function for Soybeans) The table shows a production function for soybeans. Assume that the fixed input, capital, is 10 acres of land and a tractor, which have a combined cost of $150 per day. The cost of labor is $100 per worker per day. The variable cost of producing 25 bushels of soybeans is:
answer
$100
question
The costs associated with variable inputs are ________ costs and the costs associated with ________ inputs are ________costs.
answer
variable; fixed; fixed
question
The long run is a period that is:
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long enough to vary the quantities of all factors of production
question
The term diminishing returns refers to:
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a decrease in the extra output due to the use of an additional unit of a variable input when all other inputs are held constant.
question
All except one of the following are characteristics of perfect competition. Which is the exception?
answer
There are many producers; one firm has a 25% market share, and all of the remaining firms have a market share of less than 2% each.
question
An assumption of the model of perfect competition is:
answer
many buyers and sellers.
question
A perfectly competitive firm maximizes profit by producing the quantity at which:
answer
MR = MC.
question
If a Florida strawberry wholesaler operates in a perfectly competitive market, that wholesaler will have a ________ share of the market, and consumers will consider her strawberries to be ________. Therefore, ________ advertising will take place in this market.
answer
small; standardized; little, if any
question
If a perfectly competitive firm is producing a quantity where MC > MR, then profit:
answer
can be increased by decreasing production.
question
If it produces, a perfectly competitive firm will maximize profits when the:
answer
marginal revenue equals marginal cost.
question
In a perfectly competitive industry, each firm:
answer
produces a standardized product.
question
In the short run, a perfectly competitive firm produces output and breaks even if:
answer
the firm produces the quantity at which P = ATC.
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