Exam 7: The Production Process: the Behavior of Profit-Maximizing Firms

Refer to the information provided in Figure 7.6 below to answer the question(s) that follow. Figure 7.6 -Refer to Figure 7.6. The shoe manufacturer currently produces 50 units of output. If this shoe manufacturer increases labor from 15 to 20, the marginal product of the 20th worker

The least costly way to produce any given level of output is indicated by

The formula Δq/ΔL represents

If marginal product is greater than average product, then

The process by which inputs are combined, transformed, and turned into outputs is called

You own a building that has four possible uses: a cafe, a craft store, a hardware store, and a bookstore. The value of the building in each use is $2,000; $3,000; $4,000; and $5,000, respectively. You decide to open a hardware store. The opportunity cost of using this building for a hardware store is

For economic analysis, the long run is any period in which all inputs are variable (regardless of the length of time involved).

Isoquants are downward sloping because

Refer to the information provided in Figure 7.8 below to answer the question(s) that follow. Figure 7.8 -Refer to Figure 7.8. The firm is currently along isocost CD. If the price of capital is $25, then the price of labor is

One worker produces 5 rocking chairs. To produce 10 rocking chairs it will be necessary to hire more than two workers, if diminishing returns have set in.

Refer to the information provided in Figure 7.8 below to answer the question(s) that follow. Figure 7.8 -Refer to Figure 7.8 The firmʹs isocost line could shift from CE to CD if

Firms make decisions with the goal of maximizing total revenue.

At the Larson Bakery the marginal products of the first, second, and third sales clerks are 20, 17, and 11 customers served, respectively. The total product (number of customers served) of the three sales clerks is

The Wax Works sells 500 candles at a price of $5 per candle. The Wax Worksʹ total economic costs for producing 500 candles are $3,000. The Wax Worksʹ economic profit is

Refer to the information provided in Figure 7.4 below to answer the question(s) that follow. Figure 7.4 -Refer to Figure 7.4. The average product of six workers is

Refer to the information provided in Figure 7.11 below to answer the question(s) that follow. Figure 7.11 -Refer to Figure 7.11. If the firm's level of total cost is represented by the given isocost line, the firm's optimal combination of capital and labor is given by

Firms in an economy with high capital costs have an incentive to use more ________ techniques.

A firm produces 15 units of output from the last dollar it spends on labor and 10 units from the last dollar spent on capital. The firm should

If a firm makes an economic profit, it is making at least a normal rate of return.

Assume the total product of two workers is 100 and the total product of three workers is 120. The average product of three workers is ________, and the marginal product of the third worker is ________.