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

At the Pampered Pet Salon the marginal products of the first, second, and third workers are 50, 36, and 25 dogs washed, respectively. The total product (number of dogs washed) of the three workers is

The point of tangency between an isocost line and an isoquant is necessarily

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 marginal product of the first worker is

Refer to Scenario 7.4 below to answer the question(s) that follow. SCENARIO 7.4: You own and are the only employee of a company that sells custom embroidered pet sweaters. Last year your total revenue was $120,000. Your costs for equipment, rent, and supplies were $30,000. To start this business you invested an amount of your own capital that could pay you a $50,000 a year return. -Refer to Scenario 7.4. During the year your economic costs were

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 marginal product of the third worker is

Refer to Scenario 7.4 below to answer the question(s) that follow. SCENARIO 7.4: You own and are the only employee of a company that sells custom embroidered pet sweaters. Last year your total revenue was $120,000. Your costs for equipment, rent, and supplies were $30,000. To start this business you invested an amount of your own capital that could pay you a $50,000 a year return. -Refer to Scenario 7.4. Your economic profit last year was

Refer to Scenario 7.2 below to answer the question(s) that follow. SCENARIO 7.2: You are the owner and only employee of a company that sets odds for sporting events. Last year you earned a total revenue of $100,000. Your costs for rent and supplies were $50,000. To start this business you invested an amount of your own capital that could pay you a return of $20,000 a year. -Refer to Scenario 7.2. Your economic profit last year was

If capital is a variable input in production, the law of diminishing marginal returns implies that in the short run

The version of the law of diminishing returns that applies to production

If we assume that labor is the only variable input, the slope of the total product curve in the short run

In the long run

The slope of the ________ is -MP_L/MP_K.

The specific technology chosen by a profit-maximizing clothing manufacturer depends on

Refer to the information provided in Figure 7.10 below to answer the question(s) that follow. Figure 7.10 -Refer to Figure 7.10. 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

The Oh So Humble Bakery sells 300 muffins at a price of $1 per muffin. Its explicit costs for producing 300 muffins are $250. If the bakery is earning a normal rate of return, then implicit costs must be

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 four workers is

Refer to the information provided in Figure 7.2 below to answer the question(s) that follow. Figure 7.2 -Refer to Figure 7.2. The average product with two workers is ________ lawns mowed.

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 $25, then along isocost line AB total cost is

Related to the Economics in Practice on page 151: Suppose you own a truck and use it to deliver merchandise to retailers and hire a driver to make such deliveries. At higher rates of speed the truck gets fewer miles per gallon of gas. Holding all else constant, as the price of gasoline continues to rise

If marginal product is less than average product, then