Exam 11: Output and Costs

-When long-run average cost remains constant as output increases there are constant

A firm's marginal cost is the increase in its total cost divided by the increase in its

Diminishing marginal returns and diseconomies of scale are two different names for the same thing.

-The above figure shows the costs at Barney's Bagel Bakery. At which of the following amounts of output is the AFC be the lowest?

"If the marginal product of labor curve slopes downward, then the average product of labor curve necessarily must slope downward." Explain whether the previous statement is correct or incorrect?

-In the above figure, after the second worker is hired, the marginal product of labor is

The marginal product of labor is equal to the

"The law of diminishing returns is the same as the decreasing returns to scale." Do you agree? Explain.

Output (pizzas per day) -Tony's Pizza's production function is shown in the table above. a) Suppose Tony operates Plant 2. He hires 2 workers and produces 20 pizzas a day. Is the pizzeria technologically efficient? Why or why not? b) Suppose Tony operates Plant 1. He hires 2 workers and produces 18 pizzas per day. Is Tony's Pizza technologically efficient? Why or why not? Can Tony increase production to 22 pizzas a day in the short run? If yes, how? c) Suppose Tony operates Plant 3. What is the marginal product of labor when the fourth worker is hired? When operating Plant 3, does Tony experience diminishing marginal returns? Explain. d) Suppose Tony currently uses Plant 3. Can he increase production from 40 to 50 pizzas per day in the short run? In the long run? If yes, how?

Total Product, Marginal Product, Average Product -In the above table, the marginal product of the second worker is

A period of time in which the quantity of at least one factor of production used by a firm is fixed is called the

What is the difference between average total cost and marginal cost and are they ever equal to each other?

If marginal cost exceeds average variable cost, then ________ cost is ________ as output increases.

Decent Donuts -Based on the data in the table above, which worker at Decent Donuts has the highest marginal product?

-The above table gives some cost data for Peter's Pickles. Peter's fixed cost is $20. The average total cost (ATC) when 5 barrels of pickles are produced is

In the short run

-The above table gives some cost data for Peter's Pickles. Peter's fixed cost is $20. His total cost of producing 6 barrels of pickles is

If a firm's marginal product of labor is less than its average product of labor, then an increase in the quantity of labor it employs definitely will

-Using the data in the above table, if the firm employs 5 workers, total product (measured in units per day) and average product and marginal product of the fifth worker (measured in units per worker) are

-The above figure shows the costs at Barney's Bagel Bakery. For which of the following levels of output does the marginal product of labor exceed the average product of labor?