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

Labor is available at a wage of $10.The last worker hired by Cal's Corn Farm added 20 ears of corn, which Cal has priced at four ears for $1.What advice would you give Cal?

Figure 7-11 -Figure 7-11 shows an average cost curve with points on it that correspond to three quantity levels.Which of the following statements must be wrong?

"If it were not for the law of diminishing marginal returns, the world's wheat could be grown in a flower pot." Explain.

Table 7-5 $\begin{array}{lccccccc}\text { Stereos produced } & 0 & 1 & 2 & 3 & 4 & 5 & 6 \\ \text { Total cost (in \$) } & 200 & 325 & 410 & 475 & 550 & 660 & 825\end{array}$ -Table 7-5 shows short-run total cost figures for a stereo manufacturer.The manufacturer's short-run fixed cost is

An investigator challenges in court a hospital wishing to expand.The investigator shows that over time, average hospital size has increased but so has average cost.The investigator concludes that there is no advantage to allowing hospitals to grow larger.Do you accept the investigator's case? Why? Why not?

In most businesses there is only one way to produce output.

The marginal revenue product of an hour of labor used in steel production is equal to

Give a short concise definition for the following terms and explain their relationship to the study of economics. a.marginal physical product b.marginal revenue product c.law of diminishing returns d.economies of scale

If MRP > P, a firm should use less of that input.

The optimal level of resource use comes when

Which of the following is a variable cost for an airline?

The law of diminishing marginal returns is the same as increasing returns to scale.

A roller coaster operator produces thrill-packed rides using electricity and a roller coaster.For the roller coaster operator, electricity is

In the long run,

Product indifference curves bow inward toward the origin because of diminishing returns to substitution of inputs.

Figure 7-15 -In Figure 7-15, we would expect a move of the budget line from A to B if

John Amaker owns orange groves and hires pickers for a two-week period as shown in Table 7-3. Table 7-3 1 1,000 2 2,000 3 3,000 4 3,900 5 4,700 6 5,400 7 6,000 8 6,200 9 6,000 -In Table 7-3, negative returns set in with picker

Determining the optimal choice of input combinations generally does not involve

Economies of scale

A Detroit business advertises, "The more we sell, the lower the price, and the lower the price, the more we sell." This firm is experiencing