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

John Amaker owns orange groves and hires pickers for a two-week period as shown in Table 7-3. In Table 7-3, diminishing returns set in with picker

AC is lower in the long run than in the short run because

In the short run the firm has at least one fixed input.

Everything else equal, the AC curve will shift downward if

Which of the following statements is equivalent to the law of diminishing marginal returns?

In Table 7-1, the marginal physical product of labor after the addition of the fourth worker is

The case of production with a single variable input is analogous to

Marginal cost is the

If the MRP per dollar is greater for labor than that for tools, a producer should spend more money on labor than originally planned and less on tools. How long can he continue this switch in spending? Why?

A budget line is the locus of all points representing every input combination of inputs that the producer can afford to buy with a given amount of money and given input prices.

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

If the marginal revenue product of an input is greater than its price, the

Economies of scale is another term for

The "law" of diminishing returns asserts that marginal returns will ultimately diminish when the quantity of one input is increased.

"Optimal input curve analysis is useless. Since firms never know the demand for their product with certainty, they will rarely operate at the optimal input combination." Agree or disagree?

How long is the long run?

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

Table 7-5 Table 7-5 shows short-run total cost figures for a stereo manufacturer. The short-run average variable cost of producing five stereos is

Figure 7-1   Of the graphs in Figure 7-1, which best represents marginal physical product?

The average total cost curve of a firm is U shaped.