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

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 fifth worker is

Assume the total product of three workers is 60 and the total product of four workers is 80. The four worker's average product is ________ while the fourth worker's marginal product is ________.

Profit is equal to

If a company is earning a rate of return less than the return necessary for the business to continue operations in the long run, then

There are 100 dog kennels in Atlanta. An economist studying the pricing behavior of dog kennels tells you that she is limiting her analysis to a time period that does not allow for any new dog kennels to enter the industry or for any established dog kennels to leave the industry. The time period this economist referred to is the

A firm's isocost line shifts parallel inward from the original isocost line as its

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. A yearly normal return for your company would be

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 average product of labor with four workers 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 The firm's isocost line could shift from AB to CD if

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 this shoe manufacturer increases labor from 20 to 25 (moving along the given isoquant with Q=50), the marginal product of the 25th worker

If diminishing marginal returns have already set in for Danica's Dog Training Emporium and the marginal product of the fifth dog trainer is 18, then the marginal product of the fourth dog trainer must be

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 accounting profit last year was

Refer to the information provided in Figure 7.3 below to answer the question(s) that follow. Figure 7.3 -Refer to Figure 7.3. The average product of the first worker is ________ yards raked.

A production function shows the least amount that a firm will produce given the amount of labor input.

The Wax Works sells 500 candles at a price of $10 per candle. The Wax Worksʹ total economic costs for producing 500 candles are $2,000. The Wax Worksʹ economic profit is

If the first worker produces five custom picture frames a day, and the second worker produces five additional custom picture frames a day, it is clear that diminishing marginal returns have not yet set in.

Economic costs

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 with five workers is

Assume the total product of two workers is 110 and the total product of three workers is 120. The three worker's average product is ________ while the third worker's marginal product is ________.

At the point where total product is maximized, marginal product