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

The rule that states that the marginal revenue product equal to price does not hold when there are more than two inputs.

Which of the following formulas defines average cost?

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

Figure 7-8 -Of the graphs in Figure 7-8, which represents fixed cost?

Figure 7-5 -Total fixed cost

A production indifference curve is sometimes called "isoquants" since the term implies equal quantities of output.

In the long run, more costs become fixed

Production indifference curves generally have a positive slope.

In August 1988, the Los Angeles Kings hired Wayne Gretzky for $15 million in cash.The hockey team's decision must have been based on the expectation that

The average total cost curve is U shaped in the short run but this is not true for the average total cost curve for the long run.

A firm's budget line shows a given expenditure on production, given the input prices for the production process.

Which of the following is correct?

Figure 7-2 -Al's Donuts produces about 600 dozen doughnuts daily.If flour prices increase 20 percent,

If a single large firm is able to produce a market's output less expensively than many small firms is evidence that, for this market, there are

Most firms have very little flexibility in their choice of input proportions.

Economies of scale are also called increasing returns to scale.

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

-Table 7-2 contains information on widget production.The marginal physical product of the sixth pound of plastic is ____.

A firm's production process shows constant returns to scale.It can produce 5,000 widgets at a total cost of $2,500 and 10,000 widgets at an average cost of

Which of the following experiments will yield observations that would allow one to calculate the marginal physical product of labor?