Microeconomics - Thinkwell Chapters 4+

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Refer to the graph below. U0, U1, and U2 are indifference curves for a consumer choosing ice cream cones and soda. The equilibrium position for this consumer is

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point a.

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The consumer trades until he / she reaches the point of maximum attainable satisfaction. This is the point at which

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the slope of the budget constraint is equal to the marginal rate of substitution.

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Examine the consumer's indifference map and budget constraint. Assume that the consumer is choosing combination C. If the consumer's income falls, she will choose combination

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Refer to the graph below. If the consumer is initially at point b, she should

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purchase more soda and less ice cream.

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The slope of the budget constraint tells us

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both B and C.

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Examine a consumer's indifference map for goods X and Y. This consumer would select combination

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Refer to the graph below. Which point cannot be reached by the consumer?

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When a consumer optimizes his / her satisfaction at a point at which an indifference curve is tangent to the budget constraint,

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the consumer can increase his / her satisfaction only by increasing his / her income.

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A rational consumer would be indifferent between point A and B and would choose either one.

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false

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The marginal rate of substitution is greater than the slope of the budget constraint; that is, the consumer is willing to give up more soda than the market requires at point

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An indifference curve that lies tangent to the budget constraint illustrates the combination of goods X and Y that provides the consumer the least satisfaction.

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False

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Refer to the graph below. When the price of good X falls, the new point for the most optimal choice of combinations is point

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In a two-good model, if the price of good X falls, the budget line changes in exactly the same way as if the consumer had received an income increase

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false

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At which point does the marginal rate of substitution equal the relative price ratio (MRS = Px / Py)?

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a and b

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When the price of good X falls, more of that good will be consumed. To find the highest satisfaction from a combination of goods, the consumer will

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both B and C.

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f the consumer moves from point b to point d , the consumer would

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lose satisfaction because the consumer moves to another indifference curve.

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The demand curve comes from a consumer's making optimal choices subject to his / her constraints.

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true

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Use the graphs below to analyze goods X and Y. Assume that the price of one of the goods changes. In the lower graph, the price, quantity (P0, Q0 )

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the quantity of X demanded at X's original price.

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An indifference curve that lies tangent to the budget constraint illustrates the combination of goods X and Y that provide the consumer the least satisfaction.

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false

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What does the demand curve in the lower graph represent?

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All the consumer's optimal choices of good X when the price of good X changes

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The demand curve comes from

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all of the above together.

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Economists use budget constraints and indifference curves together to find the producer's optimal choice under the constraint of the budget and prices.

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false

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All of following are examples of inputs used in a restaurant except

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the owner's salary.

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Total product is the amount of output that a firm can produce

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using a given amount of inputs.

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The schedule shown here shows the total product

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when the factory size is fixed.

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Given the firm's technology and the firm's cost to produce output, economists are able to predict a firm's profit.

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false

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According to the schedule, total product is maximized when the firm hires five employees.

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true

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Which of the following is an adjustment that would be made in the short run?

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Gymnastics Unlimited hires two new workers because the demand for their service has increased.

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Which of these statements is false?

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In the short run, all inputs are variable.

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The short run is a period of time so short that

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a firm can vary one of its inputs.

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The exhibit shows the total product for VCR's in the short run given amounts of the fixed input of labor, holding other inputs constant.

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false

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The output from adding the second unit of labor

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increases at an increasing rate.

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On the total product curve, total product is at a maximum when the firm hires five employees.

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true

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When total product increases at an increasing rate, the firm employs

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both A and B.

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Examine the production schedule shown here. Marginal product begins to diminish at

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three employees.

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In the concave portion of a total product curve, the marginal product is increasing because the employees are learning teamwork and specialization.

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false

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Decreasing marginal product first appears immediately after the maximum point on marginal product curve.

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true

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This total product curve illustrates that when the quantity of labor increases from five workers to six, the total product

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decreases

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Refer to the graph below. Marginal product becomes negative when the firm hires

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the sixth worker.

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If marginal product (MP) is negative, which of the following is true?

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The slope of the total product curve is negative.

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When total product is increasing at a decreasing rate, marginal product is

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decreasing

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When the total product curve is at its maximum, the slope of the total product curve is

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zero

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When the slope of the total product curve is increasing at an increasing rate, the marginal product is __________and ___________.

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positive; increasing.

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Marginal product reaches a maximum in the range where

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total product is increasing at an increasing rate.

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When marginal product (MP) is increasing, which of the following is true for the total product (TP) curve?

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The total product (TP) curve is convex.

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Which of these statements about the marginal product (MP) curve is true?

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The marginal product (MP) curve usually starts small, increases to a maximum, and starts to decrease.

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Which of the following statements about marginal product (MP) is true?

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Marginal product (MP) is usually graphed with marginal product on the vertical axis and the variable input on the horizontal axis.

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If each of 9 workers produces 12 widgets per day and each of 10 workers produces 14 widgets per day, what is the marginal product of the tenth worker?

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32 widgets

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What is marginal product (MP)?

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Marginal product (MP) is the change in total product made possible by the addition of one (1) more unit of a variable input.

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When the marginal product curve falls below the horizontal axis, the addition of an extra worker actually ____________ the total production of a firm.

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decreases

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Use the graph. When the marginal product of labor is ___________ the average product of labor, the average product curve is ___________.

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below; falling.

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Using the table, the average product of labor for six workers is

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4.83.

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At the maximum average product,

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average product and marginal product are equal.

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Using the table, the average product of labor for three workers is

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7.33.

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Examine the graph below. The intersection of the marginal product and average product curves occurs at the average product curve's

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maximum

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Assume that there are 10 students in a class. The average grade on a test for the nine of the students is 85. The grade of the tenth student is 90. The average grade for the class will be

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greater than 85.

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Use the graph. When the marginal product of labor curve is above the average product of labor, the average product curve is ____________.

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rising

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The average product-marginal product relationship indicates that

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if the marginal product is less than the average product, the average product is falling.

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The more productive a firm's workers are, the more workers that firm will need to hire to produce a given amount of product.

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false

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Assume that employees in a factory have an average product of one-third of a video camera. Eventually the workers learn their jobs better and the average product increases to two-thirds of a camera. The firm's costs

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decrease by one-half.

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If the worker has an average product of one-third of a video camera, (1/3), how many workers would it take to produce one whole video camera?

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All of the following about costs and production are true except

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when the productivity of workers is decreasing, the cost of production is decreasing.

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Productivity and costs are directly related.

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false

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If labor is a firm's only variable input, its variable cost ultimately depends on

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both a and b.

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A firm pays salaries to some workers and wages to other workers. Salaries are a fixed amounts of money regardless of the number of hours worked; wages are paid based on hourly rates. Firms usually categorize

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salaries as fixed costs and wages as variable costs.

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Whether a firm classifies an input as fixed or variable depends on the contribution that input makes to the firm's output.

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false

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Costs that do not change with output are called

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fixed costs.

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Suppose that a digital camera firm can produce five cameras per worker each week. If the firm hires one worker, it will cost the firm $2,000 a week to pay the worker's salary. To produce 30 digital cameras, the firm's variable costs for the week will be

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$12,000.

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Suppose that a digital camera firm can produce five cameras per worker each week. If the firm hires one worker, it will cost the firm $2,000 a week to pay the worker's hourly wages. The firm's variable cost for three workers is

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$6,000.

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Suppose that a digital camera firm can produce five cameras per worker each week. If the firm hires one worker, it will cost the firm $2,000 a week to pay the worker's hourly wages. To produce 30 digital cameras in one week the firm will hire _________ workers.

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Use the table below. This firm has a variable cost of $1,000 per worker. When the variable cost curve is increasing, a(n) ___________ in labor will ___________ production.

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increase; increase

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Use the table below. This firm has a variable cost of $1,000 per worker. In order to produce 45 bikes, it costs the firm $_________ because __________________.

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$5,000; 5 workers can produce 45 bikes and each is paid $1,000 in wages.

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A particular firm produces bikes. This firm has a variable cost of $1,000 per worker. When the variable cost curve becomes vertical, it means that a firm can continue to hire labor but its production

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remains the same.

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Refer to the graph below. The firm in this example produces bicycles. To produce 40 bicycles, the firm's variable cost is about

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$4000

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Examine the graph below. The maximum efficient output of bicycles for this firm is

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50 bicycles.

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The variable cost curve represents the expenditures on ___________ to produce a given quantity of __________.

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labor; output.

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Examine the graph below for a particular firm that produces bikes. The point of inefficiency at which the firm cannot increase production by hiring more labor is at point

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The variable cost curve has the same shape as an inverted total product curve.

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true

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To find the variable costs associated with a given level of output, the firm must determine both ____________ and ____________.

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the amount of labor; the wage rate

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To derive the variable cost curve from the total product curve, you have to ______________ the axes and ________________ the number of workers (by, to, from) the wage.

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reverse; multiply.

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The axes of the total product curve and variable cost curve are the same.

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false

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Changes in marginal costs are due to changes in productivity.

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true

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The marginal cost of production is all of the following except

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the additional cost incurred when the firm changes its fixed costs.

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At low levels of production, marginal costs tend to fall with each additional worker because

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teamwork and specialization help workers become more productive, thus causing MC to fall.

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The economic information that marginal cost gives us is

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the amount by which total cost increases when output increases by one unit.

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Marginal cost equals

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all of the above.

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When the workforce gets more productive,

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all of the above.

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Diminishing marginal product of labor is associated with

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increasing marginal cost

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Which of the following statements about the graphs of marginal cost (MC) and marginal productivity (MP) is true?

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The graphs of marginal cost (MC) and marginal productivity (MP) look like inverted images of each other.

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If marginal cost is increasing,

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the slope of the variable cost curve must be increasing.

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If a firm's variable cost to produce 80 widgets is $1,000 and its variable cost to produce 81 widgets is $1,012, which of the following is true?

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The marginal cost is $12.

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The marginal product of labor is always increasing. Therefore, marginal costs are constantly decreasing.

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false

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Which of the following represents the relationship between marginal cost and marginal productivity?

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When marginal product increases, marginal cost decreases.

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Examine the graph below. The marginal cost at 30 units of output is

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$100.

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Examine the graphs below. The inflection point of the variable cost curve is associated with the marginal cost curve in what way?

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Marginal cost is at a minimum when the variable cost curve reaches its inflection point.

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What is the meaning of ΔTP/ΔL?

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ΔTP/ΔL is the marginal product.

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The slope of the variable cost curve at any point is

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the marginal cost.

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When marginal productivity is at its maximum, which of the following is true?

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The marginal cost (MC) of labor is at a minimum.

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Examine the graph below. The inflection point on the variable cost curve is at 50 units of output.

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false

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Marginal cost is equal to the wage divided by the marginal product of labor.

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true

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Which of the following statements about the graphs of marginal cost (MC) and marginal productivity (MP) is true?

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The graphs of marginal cost (MC) and marginal productivity (MP) look like inverted images of each other.

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When each additional worker produces more output than the previously hired worker, the marginal cost of production is

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decreasing

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Which of the following is true of marginal cost (MC)?

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Marginal cost (MC) of labor is the wage rate divided by the marginal product.

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Mathematically, marginal cost equals

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the change in variable cost divided by the change in total output.

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Why are average variable costs (AVC) a factor in profitability?

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For a company to be profitable, its average variable cost (AVC) must be lower than the market price of each unit.

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Which of the following statements about average variable cost (AVC) is true?

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Average variable cost (AVC) is the variable cost divided by the number of units produced.

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If a firm used $200 worth of variable inputs to produce 100 units of output, what is the average variable cost of the output?

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$2.00 per unit

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Average variable cost is

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total variable cost divided by total output.

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On Monday, 5 workers produced 45 widgets; on Tuesday, 6 workers produced 60 widgets; on Wednesday, 7 workers produced 77 widgets; on Thursday, 8 workers produced 96 widgets; and on Friday, 9 workers produced 99 widgets. If workers are paid $100 per day, what is the average variable cost of labor for the week?

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$9.28

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Assume that a company has a wage cost of $1000 per worker per week. If three workers can make 15 units of the product in week, the firm's average variable cost is

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$200.

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Why does average variable cost (AVC) change as output changes?

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Average variable cost reflects changes in productivity.

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Average cost indicates to the firm the profit-maximizing output level.

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false

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Finding W / AP is the same as finding VC / TP, where AP is average product, VC is variable cost, and TP is total product.

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true

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Which of the following statements about average variable cost (AVC) is true?

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Average variable cost (AVC) is the variable cost per unit of total product (TP).

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Which of these statements about the average variable cost (AVC) curve is true?

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The average variable cost (AVC) curve is a mirror image of the average product of labor curve.

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During the first week of October, the workers at Walton's Widget Factory produced the following outputs: on Monday, 10 workers produced 250 widgets; on Tuesday, 11 workers produced 286 widgets; on Wednesday, 13 workers produced 364 widgets; on Thursday, 14 workers produced 396 widgets; and on Friday, 12 workers produced 324 widgets. What is the average product of labor per person, per day?

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27 widgets

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If 20 workers each earn $12 per hour and each produce on average 2.5 widgets per hour, what is the average cost of labor?

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$ 4.80

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Which of the following statements about the average product of labor is true?

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When the average product of labor is increasing, the average variable cost is decreasing.

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The average product of labor for 10 workers is 9 widgets per day, and the marginal product of labor of the 11th worker is 20 widgets. If each worker earns $100 per day, what happens to the average cost of labor when the firm adds the 11th worker?

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The average cost of labor decreases from $11.11 to $10.00.

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Which of these statements about the average product of labor curve is true?

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The average product of labor curve is a mirror image of the average variable cost curve.

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What is the average product of labor?

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The average product of labor is the total product divided by the number of workers.

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When the average product of labor is _____________, the average variable cost is _______________.

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increasing; decreasing

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If the average variable cost of widgets is $4.00 and the firm's total product last month was 1,200 widgets, what was the firm's variable cost last month?

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$4,800

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Examine the table below. At the maximum average product, the average variable cost is at a minimum.

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true

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Which of these statements about slope is not true?

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The slope of the marginal cost (MC) curve is greatest when the marginal cost is increasing or decreasing most rapidly.

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What is the relationship between the marginal cost (MC) of labor curve and the marginal product (MP) curve?

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The curves are mirror images of each other.

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If marginal cost is less than average variable cost, average variable cost is pulled up.

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false

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If the average variable cost curve is decreasing,

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the marginal cost curve must be below it.

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At what point does the marginal cost (MC) curve cross the average variable cost (AVC) curve?

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Both A and B.

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The variable cost (VC) for a firm to produce 100 widgets is $1,100. The marginal cost (MC) to produce the 101st widget is $5. What is the firm's average variable cost (AVC) to produce 101 widgets?

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$10.94

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If marginal cost is greater than average variable cost,

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average variable cost is increasing.

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A firm incurs average variable costs of $200 per widget to produce 50 widgets and average variable costs of $199 per widget to produce 51 widgets. What is the marginal cost of the 51st widget?

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149

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If the marginal variable cost (MC) is lower than the average variable cost (AVC), what is happening to the AVC?

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The average variable cost (AVC) is decreasing.

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Which of the following statements about fixed costs is true?

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Average fixed costs decrease as total product increases.

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Which of the following statements about the graphs of average fixed costs (AFC), average variable costs (AVC), and average total costs (ATC) is true?

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The average total costs (ATC) curve lies above the average fixed costs (AFC) curve and the average variable costs (AVC) curve.

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A firm's fixed costs (FC) are $10,000, and its variable costs (VC) to produce 1,000 widgets are $5,000. What is the firm's average total cost (ATC) to produce 1,000 widgets?

answer

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Average total cost equals

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AFC + AVC.

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Which of the following statements about fixed costs is true?

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Fixed costs cannot be changed in the short run.

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Which of the following cost curves is not U-shaped?

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the average fixed cost curve

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Which of the following statements about average fixed costs (AFC) is true?

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Average fixed costs (AFC) plus average variable costs equals average total costs (ATC).

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A firm's fixed costs (FC) are $10,000. Its variable costs (VC) to produce 100 widgets are $5,000, and the marginal cost of the 101st widget is $10. What happens to the firm's average total cost (ATC) when the firm produces 101 widgets rather than 100?

answer

The average total cost decreases from $150.00 to $148.60

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In the short run, if the firm continues to increase production, average fixed costs

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approach zero.

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At 100 units of output, total cost is $12,000, total variable cost is $7000, and total fixed cost is $5000. Average total cost is

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120

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Which of the following statements about average total cost (ATC) is true?

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Average total cost (ATC) is the sum of the average fixed cost (AFC) and the average variable cost (AVC).

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A firm has fixed costs of $20,000, and its variable cost to produce 10,000 widgets is $30,000. What is the firm's average variable cost to produce 10,000 widgets?

answer

question

A firm has fixed costs of $5,000. Its average variable cost (AVC) to produce 100 widgets is $3,000, and its average variable cost (AVC) to produce 101 widgets is $2,990. What is the average total cost (ATC) to produce 100 widgets?

answer

$3,050

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If a firm has only variable costs, average total costs and average variable costs are the same.

answer

true

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A firm has fixed costs of $5,000. Its average variable cost (AVC) to produce 100 widgets is $3,000, and its average variable cost (AVC) to produce 101 widgets is $2,990. What is the marginal cost (MC) of the 101st widget?

answer

$1,990

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If, at a certain level of output, a firm has average fixed costs (AFC) of $20 per unit and average variable costs (AVC) of $50 per unit, which of the following statements is true of its average total cost (ATC)?

answer

The average cost is $70 per unit.

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To say that average total cost equals total cost divided by total product is the same as saying that average total cost equals the sum of total fixed cost divided by total product and total variable cost divided by total product.

answer

true

1 of 150

question

Refer to the graph below. U0, U1, and U2 are indifference curves for a consumer choosing ice cream cones and soda. The equilibrium position for this consumer is

answer

point a.

question

The consumer trades until he / she reaches the point of maximum attainable satisfaction. This is the point at which

answer

the slope of the budget constraint is equal to the marginal rate of substitution.

question

Examine the consumer's indifference map and budget constraint. Assume that the consumer is choosing combination C. If the consumer's income falls, she will choose combination

answer

question

Refer to the graph below. If the consumer is initially at point b, she should

answer

purchase more soda and less ice cream.

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The slope of the budget constraint tells us

answer

both B and C.

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Examine a consumer's indifference map for goods X and Y. This consumer would select combination

answer

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Refer to the graph below. Which point cannot be reached by the consumer?

answer

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When a consumer optimizes his / her satisfaction at a point at which an indifference curve is tangent to the budget constraint,

answer

the consumer can increase his / her satisfaction only by increasing his / her income.

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A rational consumer would be indifferent between point A and B and would choose either one.

answer

false

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The marginal rate of substitution is greater than the slope of the budget constraint; that is, the consumer is willing to give up more soda than the market requires at point

answer

question

An indifference curve that lies tangent to the budget constraint illustrates the combination of goods X and Y that provides the consumer the least satisfaction.

answer

False

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Refer to the graph below. When the price of good X falls, the new point for the most optimal choice of combinations is point

answer

question

In a two-good model, if the price of good X falls, the budget line changes in exactly the same way as if the consumer had received an income increase

answer

false

question

At which point does the marginal rate of substitution equal the relative price ratio (MRS = Px / Py)?

answer

a and b

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When the price of good X falls, more of that good will be consumed. To find the highest satisfaction from a combination of goods, the consumer will

answer

both B and C.

question

f the consumer moves from point b to point d , the consumer would

answer

lose satisfaction because the consumer moves to another indifference curve.

question

The demand curve comes from a consumer's making optimal choices subject to his / her constraints.

answer

true

question

Use the graphs below to analyze goods X and Y. Assume that the price of one of the goods changes. In the lower graph, the price, quantity (P0, Q0 )

answer

the quantity of X demanded at X's original price.

question

An indifference curve that lies tangent to the budget constraint illustrates the combination of goods X and Y that provide the consumer the least satisfaction.

answer

false

question

What does the demand curve in the lower graph represent?

answer

All the consumer's optimal choices of good X when the price of good X changes

question

The demand curve comes from

answer

all of the above together.

question

Economists use budget constraints and indifference curves together to find the producer's optimal choice under the constraint of the budget and prices.

answer

false

question

All of following are examples of inputs used in a restaurant except

answer

the owner's salary.

question

Total product is the amount of output that a firm can produce

answer

using a given amount of inputs.

question

The schedule shown here shows the total product

answer

when the factory size is fixed.

question

Given the firm's technology and the firm's cost to produce output, economists are able to predict a firm's profit.

answer

false

question

According to the schedule, total product is maximized when the firm hires five employees.

answer

true

question

Which of the following is an adjustment that would be made in the short run?

answer

Gymnastics Unlimited hires two new workers because the demand for their service has increased.

question

Which of these statements is false?

answer

In the short run, all inputs are variable.

question

The short run is a period of time so short that

answer

a firm can vary one of its inputs.

question

The exhibit shows the total product for VCR's in the short run given amounts of the fixed input of labor, holding other inputs constant.

answer

false

question

The output from adding the second unit of labor

answer

increases at an increasing rate.

question

On the total product curve, total product is at a maximum when the firm hires five employees.

answer

true

question

When total product increases at an increasing rate, the firm employs

answer

both A and B.

question

Examine the production schedule shown here. Marginal product begins to diminish at

answer

three employees.

question

In the concave portion of a total product curve, the marginal product is increasing because the employees are learning teamwork and specialization.

answer

false

question

Decreasing marginal product first appears immediately after the maximum point on marginal product curve.

answer

true

question

This total product curve illustrates that when the quantity of labor increases from five workers to six, the total product

answer

decreases

question

Refer to the graph below. Marginal product becomes negative when the firm hires

answer

the sixth worker.

question

If marginal product (MP) is negative, which of the following is true?

answer

The slope of the total product curve is negative.

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When total product is increasing at a decreasing rate, marginal product is

answer

decreasing

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When the total product curve is at its maximum, the slope of the total product curve is

answer

zero

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When the slope of the total product curve is increasing at an increasing rate, the marginal product is __________and ___________.

answer

positive; increasing.

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Marginal product reaches a maximum in the range where

answer

total product is increasing at an increasing rate.

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When marginal product (MP) is increasing, which of the following is true for the total product (TP) curve?

answer

The total product (TP) curve is convex.

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Which of these statements about the marginal product (MP) curve is true?

answer

The marginal product (MP) curve usually starts small, increases to a maximum, and starts to decrease.

question

Which of the following statements about marginal product (MP) is true?

answer

Marginal product (MP) is usually graphed with marginal product on the vertical axis and the variable input on the horizontal axis.

question

If each of 9 workers produces 12 widgets per day and each of 10 workers produces 14 widgets per day, what is the marginal product of the tenth worker?

answer

32 widgets

question

What is marginal product (MP)?

answer

Marginal product (MP) is the change in total product made possible by the addition of one (1) more unit of a variable input.

question

When the marginal product curve falls below the horizontal axis, the addition of an extra worker actually ____________ the total production of a firm.

answer

decreases

question

Use the graph. When the marginal product of labor is ___________ the average product of labor, the average product curve is ___________.

answer

below; falling.

question

Using the table, the average product of labor for six workers is

answer

4.83.

question

At the maximum average product,

answer

average product and marginal product are equal.

question

Using the table, the average product of labor for three workers is

answer

7.33.

question

Examine the graph below. The intersection of the marginal product and average product curves occurs at the average product curve's

answer

maximum

question

Assume that there are 10 students in a class. The average grade on a test for the nine of the students is 85. The grade of the tenth student is 90. The average grade for the class will be

answer

greater than 85.

question

Use the graph. When the marginal product of labor curve is above the average product of labor, the average product curve is ____________.

answer

rising

question

The average product-marginal product relationship indicates that

answer

if the marginal product is less than the average product, the average product is falling.

question

The more productive a firm's workers are, the more workers that firm will need to hire to produce a given amount of product.

answer

false

question

answer

decrease by one-half.

question

If the worker has an average product of one-third of a video camera, (1/3), how many workers would it take to produce one whole video camera?

answer

question

All of the following about costs and production are true except

answer

when the productivity of workers is decreasing, the cost of production is decreasing.

question

Productivity and costs are directly related.

answer

false

question

If labor is a firm's only variable input, its variable cost ultimately depends on

answer

both a and b.

question

answer

salaries as fixed costs and wages as variable costs.

question

Whether a firm classifies an input as fixed or variable depends on the contribution that input makes to the firm's output.

answer

false

question

Costs that do not change with output are called

answer

fixed costs.

question

answer

$12,000.

question

answer

$6,000.

question

answer

question

Use the table below. This firm has a variable cost of $1,000 per worker. When the variable cost curve is increasing, a(n) ___________ in labor will ___________ production.

answer

increase; increase

question

Use the table below. This firm has a variable cost of $1,000 per worker. In order to produce 45 bikes, it costs the firm $_________ because __________________.

answer

$5,000; 5 workers can produce 45 bikes and each is paid $1,000 in wages.

question

A particular firm produces bikes. This firm has a variable cost of $1,000 per worker. When the variable cost curve becomes vertical, it means that a firm can continue to hire labor but its production

answer

remains the same.

question

Refer to the graph below. The firm in this example produces bicycles. To produce 40 bicycles, the firm's variable cost is about

answer

$4000

question

Examine the graph below. The maximum efficient output of bicycles for this firm is

answer

50 bicycles.

question

The variable cost curve represents the expenditures on ___________ to produce a given quantity of __________.

answer

labor; output.

question

Examine the graph below for a particular firm that produces bikes. The point of inefficiency at which the firm cannot increase production by hiring more labor is at point

answer

question

The variable cost curve has the same shape as an inverted total product curve.

answer

true

question

To find the variable costs associated with a given level of output, the firm must determine both ____________ and ____________.

answer

the amount of labor; the wage rate

question

To derive the variable cost curve from the total product curve, you have to ______________ the axes and ________________ the number of workers (by, to, from) the wage.

answer

reverse; multiply.

question

The axes of the total product curve and variable cost curve are the same.

answer

false

question

Changes in marginal costs are due to changes in productivity.

answer

true

question

The marginal cost of production is all of the following except

answer

the additional cost incurred when the firm changes its fixed costs.

question

At low levels of production, marginal costs tend to fall with each additional worker because

answer

teamwork and specialization help workers become more productive, thus causing MC to fall.

question

The economic information that marginal cost gives us is

answer

the amount by which total cost increases when output increases by one unit.

question

Marginal cost equals

answer

all of the above.

question

When the workforce gets more productive,

answer

all of the above.

question

Diminishing marginal product of labor is associated with

answer

increasing marginal cost

question

Which of the following statements about the graphs of marginal cost (MC) and marginal productivity (MP) is true?

answer

The graphs of marginal cost (MC) and marginal productivity (MP) look like inverted images of each other.

question

If marginal cost is increasing,

answer

the slope of the variable cost curve must be increasing.

question

If a firm's variable cost to produce 80 widgets is $1,000 and its variable cost to produce 81 widgets is $1,012, which of the following is true?

answer

The marginal cost is $12.

question

The marginal product of labor is always increasing. Therefore, marginal costs are constantly decreasing.

answer

false

question

Which of the following represents the relationship between marginal cost and marginal productivity?

answer

When marginal product increases, marginal cost decreases.

question

Examine the graph below. The marginal cost at 30 units of output is

answer

$100.

question

Examine the graphs below. The inflection point of the variable cost curve is associated with the marginal cost curve in what way?

answer

Marginal cost is at a minimum when the variable cost curve reaches its inflection point.

question

What is the meaning of ΔTP/ΔL?

answer

ΔTP/ΔL is the marginal product.

question

The slope of the variable cost curve at any point is

answer

the marginal cost.

question

When marginal productivity is at its maximum, which of the following is true?

answer

The marginal cost (MC) of labor is at a minimum.

question

Examine the graph below. The inflection point on the variable cost curve is at 50 units of output.

answer

false

question

Marginal cost is equal to the wage divided by the marginal product of labor.

answer

true

question

Which of the following statements about the graphs of marginal cost (MC) and marginal productivity (MP) is true?

answer

The graphs of marginal cost (MC) and marginal productivity (MP) look like inverted images of each other.

question

When each additional worker produces more output than the previously hired worker, the marginal cost of production is

answer

decreasing

question

Which of the following is true of marginal cost (MC)?

answer

Marginal cost (MC) of labor is the wage rate divided by the marginal product.

question

Mathematically, marginal cost equals

answer

the change in variable cost divided by the change in total output.

question

Why are average variable costs (AVC) a factor in profitability?

answer

For a company to be profitable, its average variable cost (AVC) must be lower than the market price of each unit.

question

Which of the following statements about average variable cost (AVC) is true?

answer

Average variable cost (AVC) is the variable cost divided by the number of units produced.

question

If a firm used $200 worth of variable inputs to produce 100 units of output, what is the average variable cost of the output?

answer

$2.00 per unit

question

Average variable cost is

answer

total variable cost divided by total output.

question

answer

$9.28

question

Assume that a company has a wage cost of $1000 per worker per week. If three workers can make 15 units of the product in week, the firm's average variable cost is

answer

$200.

question

Why does average variable cost (AVC) change as output changes?

answer

Average variable cost reflects changes in productivity.

question

Average cost indicates to the firm the profit-maximizing output level.

answer

false

question

Finding W / AP is the same as finding VC / TP, where AP is average product, VC is variable cost, and TP is total product.

answer

true

question

Which of the following statements about average variable cost (AVC) is true?

answer

Average variable cost (AVC) is the variable cost per unit of total product (TP).

question

Which of these statements about the average variable cost (AVC) curve is true?

answer

The average variable cost (AVC) curve is a mirror image of the average product of labor curve.

question

answer

27 widgets

question

If 20 workers each earn $12 per hour and each produce on average 2.5 widgets per hour, what is the average cost of labor?

answer

$ 4.80

question

Which of the following statements about the average product of labor is true?

answer

When the average product of labor is increasing, the average variable cost is decreasing.

question

answer

The average cost of labor decreases from $11.11 to $10.00.

question

Which of these statements about the average product of labor curve is true?

answer

The average product of labor curve is a mirror image of the average variable cost curve.

question

What is the average product of labor?

answer

The average product of labor is the total product divided by the number of workers.

question

When the average product of labor is _____________, the average variable cost is _______________.

answer

increasing; decreasing

question

If the average variable cost of widgets is $4.00 and the firm's total product last month was 1,200 widgets, what was the firm's variable cost last month?

answer

$4,800

question

Examine the table below. At the maximum average product, the average variable cost is at a minimum.

answer

true

question

Which of these statements about slope is not true?

answer

The slope of the marginal cost (MC) curve is greatest when the marginal cost is increasing or decreasing most rapidly.

question

What is the relationship between the marginal cost (MC) of labor curve and the marginal product (MP) curve?

answer

The curves are mirror images of each other.

question

If marginal cost is less than average variable cost, average variable cost is pulled up.

answer

false

question

If the average variable cost curve is decreasing,

answer

the marginal cost curve must be below it.

question

At what point does the marginal cost (MC) curve cross the average variable cost (AVC) curve?

answer

Both A and B.

question

The variable cost (VC) for a firm to produce 100 widgets is $1,100. The marginal cost (MC) to produce the 101st widget is $5. What is the firm's average variable cost (AVC) to produce 101 widgets?

answer

$10.94

question

If marginal cost is greater than average variable cost,

answer

average variable cost is increasing.

question

A firm incurs average variable costs of $200 per widget to produce 50 widgets and average variable costs of $199 per widget to produce 51 widgets. What is the marginal cost of the 51st widget?

answer

149

question

If the marginal variable cost (MC) is lower than the average variable cost (AVC), what is happening to the AVC?

answer

The average variable cost (AVC) is decreasing.

question

Which of the following statements about fixed costs is true?

answer

Average fixed costs decrease as total product increases.

question

Which of the following statements about the graphs of average fixed costs (AFC), average variable costs (AVC), and average total costs (ATC) is true?

answer

The average total costs (ATC) curve lies above the average fixed costs (AFC) curve and the average variable costs (AVC) curve.

question

A firm's fixed costs (FC) are $10,000, and its variable costs (VC) to produce 1,000 widgets are $5,000. What is the firm's average total cost (ATC) to produce 1,000 widgets?

answer

question

Average total cost equals

answer

AFC + AVC.

question

Which of the following statements about fixed costs is true?

answer

Fixed costs cannot be changed in the short run.

question

Which of the following cost curves is not U-shaped?

answer

the average fixed cost curve

question

Which of the following statements about average fixed costs (AFC) is true?

answer

Average fixed costs (AFC) plus average variable costs equals average total costs (ATC).

question

answer

The average total cost decreases from $150.00 to $148.60

question

In the short run, if the firm continues to increase production, average fixed costs

answer

approach zero.

question

At 100 units of output, total cost is $12,000, total variable cost is $7000, and total fixed cost is $5000. Average total cost is

answer

120

question

Which of the following statements about average total cost (ATC) is true?

answer

Average total cost (ATC) is the sum of the average fixed cost (AFC) and the average variable cost (AVC).

question

A firm has fixed costs of $20,000, and its variable cost to produce 10,000 widgets is $30,000. What is the firm's average variable cost to produce 10,000 widgets?

answer

question

answer

$3,050

question

If a firm has only variable costs, average total costs and average variable costs are the same.

answer

true

question

answer

$1,990

question

answer

The average cost is $70 per unit.

question

answer

true

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