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Use the following table to answer the question below: The amount of total output produced from various combinations of labor and capital.  Units of Capital 1234120364853 Units 238688894 of 35394122133 Iabar 463112148164568120164184\begin{array}{l}\quad\quad\quad\quad\quad\quad\text { Units of Capital }\\\begin{array} { c c c c c c } & & 1 & 2 & 3 & 4 \\ & 1 & 20 & 36 & 48 & 53 \\\text { Units } & 2 & 38 & 68 & 88 & 94 \\\text { of } & 3 & 53 & 94 & 122 & 133 \\\text { Iabar } & 4 & 63 & 112 & 148 & 164 \\& 5 & 68 & 120 & 164 & 184\end{array}\end{array} If the amount of labor used increases from three to four units,the marginal product of the second unit of capital


A) increases by 8 units.
B) increases by 49 units.
C) decreases by 14 units.
D) decreases by 49 units.
E) none of the above

Correct Answer

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-Assume labor-the only variable input of a firm-has average and marginal product curves shown in the figure above.The price of labor is $1,000 per unit .At minimum average variable cost,the firm employs __________ units of labor and minimum average variable cost is reached at __________ units of output. A) 300; 810,000 B) 300; 962,500 C) 450; 962,500 D) 500; 540,000 E) none of the above -Assume labor-the only variable input of a firm-has average and marginal product curves shown in the figure above.The price of labor is $1,000 per unit .At minimum average variable cost,the firm employs __________ units of labor and minimum average variable cost is reached at __________ units of output.


A) 300; 810,000
B) 300; 962,500
C) 450; 962,500
D) 500; 540,000
E) none of the above

Correct Answer

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The following graph shows the marginal and average product curves for labor,the firm's only variable input.The monthly wage for labor is $2,800.Fixed cost is $160,000. The following graph shows the marginal and average product curves for labor,the firm's only variable input.The monthly wage for labor is $2,800.Fixed cost is $160,000. When the firm uses 120 units of labor,what is its AVC at this output? A) $40 B) $70 C) $60 D) $56 E) none of the above When the firm uses 120 units of labor,what is its AVC at this output?


A) $40
B) $70
C) $60
D) $56
E) none of the above

Correct Answer

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In the figure above,the wage rate is $600 and total fixed cost is $15,000.How much output does the firm produce when average variable cost is at its minimum? A) 270 B) 375 C) 30 D) 1,600 E) 4,800 In the figure above,the wage rate is $600 and total fixed cost is $15,000.How much output does the firm produce when average variable cost is at its minimum?


A) 270
B) 375
C) 30
D) 1,600
E) 4,800

Correct Answer

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Suppose that the firm's only variable input is labor.When 50 workers are used,the average product of labor is 50 and the marginal product of labor is 75.The wage rate is $80 and the total cost of the fixed input is $500.Which of the following is true?


A) Average variable cost is increasing.
B) Marginal cost is increasing.
C) Average variable cost is decreasing.
D) Cannot determine without more information.

Correct Answer

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Which of the following statements is FALSE?


A) A firm plans in the long run and operates in the short run.
B) In the short run,a firm can change some but not all of its inputs.
C) In the long run all inputs are variable.
D) In the short run all inputs are fixed.

Correct Answer

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If average product is increasing,then marginal product


A) must be greater than average product.
B) must be less than average product.
C) must be increasing.
D) cannot be decreasing.
E) both a and c

Correct Answer

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