Exam 11: Behind the Supply Curve: Inputs and Costs

Use the following to answer questions: Figure: Short-Run Costs -(Figure: Short-Run Costs) Look at the figure Short-Run Costs. B is the _____ cost curve.

The slope of the total product curve is equal to the average product of labor.

If marginal cost is greater than average total cost, then average total cost is:

If a firm has to increase output suddenly to meet an increase in demand, its average total cost will increase in the short run until it has time to add physical capital.

Use the following to answer questions: Figure: The Total Product -(Figure: The Total Product) Look at the figure The Total Product. After hiring L₂ labor and producing at point B on the total product curve, hiring more labor beyond L₂ would cause the:

Use the following to answer questions: -(Table: Cost Data) Look at the table Cost Data. The average total cost of producing 2 purses is:

In the short run, the average total cost curve always lies above the average variable cost curve.

The curve that illustrates the relationship between output and average total cost when the fixed cost has been chosen to minimize average total cost for each level of output is the _____ curve.

It is time to pay the bills. You pay the rent, the basic cable bill, the electricity bill, and your grocery bill. Which of these are good examples of fixed costs and which are variable costs? Explain your reasoning.

Decreasing and increasing returns to scale account for the shape of the:

When diseconomies of scale occur:

The _____ curve shows the additional cost of producing each additional unit of output.

The long-run average total cost curve shows the relationship between output and the average total cost when variable cost has been chosen to minimize average total cost for each level of output.

Use the following to answer questions: -(Table: Production Function for Soybeans) Look at the table Production Function for Soybeans. Assume that the fixed input, capital, is 10 acres of land and a tractor, which have a combined cost of $150 per day. The cost of labor is $100 per worker per day. The variable cost of producing 45 bushels of soybeans is:

Use the following to answer questions: -(Table: Cost Data) Look at the table Cost Data. The average total cost of producing 4 purses is:

Marginal cost is the:

In the short run, if marginal cost is higher than average total cost, producing an extra unit of output must raise average total cost.

Use the following to answer questions: Figure: Short-Run Costs II -(Figure: Short-Run Costs II) Look at the figure Short-Run Costs II. Curve 1 crosses the average total cost curve at:

The long-run average total cost of producing 100 units of output is $4, while the long-run average cost of producing 110 units of output is $4. These numbers suggest that the firm producing this output has:

Average total cost is the ratio of _____ cost to _____.