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

Figure 7-1 -USX, a steel company, reduced the number of man-hours required to produce a ton of steel from 10.8 in 1982 to 3.8 in 1990, thereby eliminating 55,000 jobs.Technically, this rise in productivity means the

A cost curve drawn with years on the horizontal axis and costs per unit on the vertical axis would be a(n)

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

"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?

Which of the following is most likely to be a variable cost for an airline?

If the firm's marginal physical product is 8, and its handicrafts sell for $70, when a unit of labor costs $150, the firm is operating

Figure 7-9 -Of the graphs in Figure 7-9, which represents total fixed cost?

A change in one input price will cause the slope of the firm's budget line to change.

Figure 7-13 -Everything else equal, the AC curve will shift downward if

Table 7-4 -Table 7-4 shows a production relationship.Assuming the capital stock is fixed at three units and the cost per day of labor is $65, what is the most labor that it is efficient to hire if the product price is $1 per unit?

If production indifference curves cross, this indicates that there are different ways to produce the same output level.

Table 7-5 -Table 7-5 shows short-run total cost figures for a stereo manufacturer.The manufacturer's short-run fixed cost is

Differentiate between the short run and the long run.

Production indifference curves bow inward toward the graph's origin because of

Input choices in the present are often affected by past decisions.

Production indifference curves show the combination of inputs that produce a given output.

Higher production indifference curves correspond to larger amounts of one input in relation to a second input.

Figure 7-3 ​ -Government provides many goods and services to the public because they are not provided by free markets.Some economists believe bureaucrats who manage the programs have no interest in maximizing net benefits (profits) but instead maximize the size of a program constrained only by the need to have total benefits exceed total costs.Figure 7-3 shows total benefits and cost curves for a program.What point is the efficient point, and what point will the bureaucrat choose?

Total variable costs will initially increase and then begin to decrease as output increases.

Figure 7-17 -With regard to the characteristics of production indifference curves, which of the following statements is/are NOT true?