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

The total cost curve for a firm can be derived from isoquants and isocost lines by

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. If the price of capital is $10 and the price of labor is $20, the optimal production technique is

If economic profit is zero, a firm

Costs of production are determined

Refer to Scenario 7.5 below to answer the question(s) that follow. SCENARIO 7.5: You own and are the only employee of a company that customizes bicycles. Last year your total revenue was $60,000. Your costs for rent and supplies were $25,000. To start this business you invested an amount of your own capital that could pay you a $45,000 a year return. -Refer to Scenario 7.5. During the year your economic costs were

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

A total cost curve shows the ________ of producing each level of output.

Refer to Scenario 7.8 below to answer the question(s) that follow. SCENARIO 7.8: A swimming pool cleaning company has the following production possibilities. With one, two, three, and four workers, the company can clean 5, 12, 17, and 20 pools per day, respectively. -Refer to Scenario 7.8. The marginal product of the fourth worker is

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. If the price of capital is $20, then along isocost line AB total cost 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. At Point C, the slope of isoquant q² = 200 is

You are certain that the restaurant industry's normal rate of return is 12%. You would expect a(n) ________ normal rate of return for a soft drink manufacturing industry that people consider much less risky than the restaurant industry.

A graph showing all the combinations of capital and labor available for a given total cost is the

To minimize costs, a firm should use more labor and less capital if the product derived from the last dollar spent on labor is ________ the product derived from the last dollar spent on capital.

When a firm maximizes total product in the short run, average product is

Refer to the information provided in Figure 7.9 below to answer the question(s) that follow. Figure 7.9 -Refer to Figure 7.9. The slope of isocost CD is

Related to the Economics in Practice on page 150: For pineapple farmers in Ghana, the choice of how much fertilizer to use was highly dependent on how much fertilizer their more successful neighbor farmers used. This process of technology adoption is referred to as

Economists consider the long run as a period of more than one year.

Assume the total product of two workers is 130 and the total product of three workers is 150. The average product of three workers is ________, and the marginal product of the third worker is ________.

Firms cannot enter an industry in which positive profits are being earned in

Hannah's House of Hotcakes serves 30 customers in an hour when it hires one worker. It serves 60 customers in an hour when it hires two workers. The marginal product of the second worker is ________ customers served per hour.