Exam 7: Production, Inputs, and Cost: Building Blocks for Supply Analysis

"Assuming the long-run average cost curve is U-shaped, a firm will always seek to operate at the lowest point on the long-run average cost curve." True or false?

Cost minimization is the process of making optimal use of all of the inputs whose quantities are

When the marginal revenue product of an input is less than its price, the

If in some range of production average cost is falling, the firm is experiencing

Figure 7-2 -In Figure 7-2, average cost at 500 units of output equals

The least costly combination of inputs is influenced by the relative prices of inputs.

Explain briefly the following concepts: (a)Increasing returns to scale. (b)Decreasing returns to scale. (c)Constant returns to scale.

The average cost curve

One reason why critics argue that large firms should not be broken up is that in some cases

Production indifference curves generally have a positive slope.

Table 7-1 1 5 2 12 3 22 4 30 5 35 -In Table 7-1, the marginal physical product of labor after the addition of the fourth worker is

In which zone does the total physical product reach it maximum value?

A rise in the price of an input can be expected to lead to a rise in its marginal physical product.

Firms should use a resource up to a point where MRP = P.

Production costs for a given output will be minimized when the

Marginal revenue product is the