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Exam 11: Technology,production,and Costs

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Question 21

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The law of diminishing marginal returns states

A) that at some point,adding more of a fixed input to a given amount of variable inputs will cause the marginal product of the variable input to decline.
B) that at some point,adding more of a variable input to a given amount of a fixed input will cause the marginal product of the variable input to decline.
C) that in the presence of a fixed factor,at some point average product of labor starts to fall as more and more variable inputs are added.
D) average total costs of production initially fall and after some point starts to rise at a decreasing rate as output increases.

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Question 22

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Figure 11-16 -Refer to Figure 11-16.The figure above illustrates a series of isoquants.Which of the following statements is true?

A) Points x,z,and y all represent the same output.
B) Points z and y represent the same output;this output is produced with more capital at z than at y.
C) Point x and y represent the same output but the cost of production at y is greater than the cost of production at x.
D) Point z represents a greater output than point x or point y.

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Question 23

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Joan Jillson owns a coffee shop.Assume that the marginal product of the labor Joan employs (MPL) equals 500 cups per week and the marginal product of her shop's capital (MPK) equals 1,000.Assume also that the wage (w) Joan pays her workers equals $250 per week and the rental price (r) of her capital - her coffee machines - equals $500 per week.Which of the following correctly analyzes whether Joan is minimizing her costs?

Average total cost is

If marginal product is equal to average product,then total product is at a maximum.

Figure 11-1 -Refer to Figure 11-1.The marginal product of the 3rd worker is

Table 11-3 $\begin{array} { | c | c | c | c | } \hline \begin{array} { c } \text { Quantity of } \\\text { Workers }\end{array} & \begin{array} { c } \text { Quantity of } \\\text { Boxes }\end{array} & \begin{array} { c } \text { Marginal } \\\text { Product of } \\\text { Labor }\end{array} & \begin{array} { c } \text { Average } \\\text { Product of } \\\text { Labor }\end{array} \\\hline 0 & 0 & - - - - & - - - - \\\hline 1 & 50 & & \\\hline 2 & 200 & & \\\hline 3 & 240 & & \\\hline 4 & 264 & & \\\hline 5 & 284 & & \\\hline\end{array}$ -Refer to Table 11-3.The table above refers to the relationship between the quantity of workers employed and the number of cardboard boxes produced per day by Manny's House of Boxes.The capital used to produce the boxes is fixed.Diminishing returns to labor are first observed in this example after Manny hires the ________ worker.

If average total cost is $50 and average fixed cost is $15 when output is 20 units,then the firm's total variable cost at that level of output is

If we have information about workers' marginal products,then total and average product can be found by

The process a firm uses to turn inputs into outputs of goods and services is called technology.

Figure 11-5 -Refer to Figure 11-5.The vertical difference between curves F and G measures

Which of the following is an implicit cost of production?

Figure 11-10 -Refer to Figure 11-10.Identify the minimum efficient scale of production.

1eaaa28_a9cb_7b34_9b29_2f66e61cebfd_TB3018_00_TB3018_00_TB3018_00 Table 11-1 shows the technology of production at the Matsuko's Mushroom Farm for the month of May. -Refer to Table 11-1.What is the average product of labor when the farm hires 5 workers?

The change in a firm's total cost from producing one more unit of a good or service is

The slope of an isoquant measures

If,after hiring the 6th worker,a firm's output falls,then the marginal product of the 6th worker is negative.

Figure 11-11 illustrates the long-run average cost curve for a firm that produces picture frames.The graph also includes short-run average cost curves for three firm sizes: ATCa,ATCb and ATCc. -Refer to Figure 11-11.In the short run,if the firm sells fewer than 5,000 picture frames per month

Figure 11-13 -Refer to Figure 11-13.The lines shown in the diagram are isocost lines.A movement from CE to BD occurs when

Use a long-run average cost curve graph to illustrate how diseconomies of scale would not make it beneficial for two companies to go through with a merger.