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

When marginal revenue product of an input is less than its price, the producers should use less of the input.

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

Total fixed cost falls as output expands.

Figure 7-5   Which of the graphs in Figure 7-5 could be a firm's total fixed cost curve?

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

The amount of time during which at least one input cannot be adjust is the

Draw a graph using production indifference curves and budget lines showing a firm initially minimizing cost with its inputs of A and B. Then illustrate a new optimal combination of inputs when the prices of the inputs change.

"A producer wanting to employ optimal quantity of inputs should choose the point where diminishing returns set in."

If MPP _a \P _a > MPP _b \P _b , then the proportions of these two inputs is optimal.

Marginal fixed costs decrease as output increases.

Marginal physical product measures the increase in total output that results from a one-unit increase in an input.

Greg's Restaurant specializes in cheeseburger and produces about 2,000 burgers daily.  Greg's rent went up by 15 percent over last year.  This will result in

In the long run, more costs become fixed

In Table 7-1, the marginal physical product of labor from the addition of the second worker is ​

In a machine shop, the marginal physical product of an additional unit of labor is 4 units of output, while the marginal physical product of an additional piece of machinery is 2, under what conditions would the firm increase labor usage?

In a bakery for a given amount of croissant production, an additional pastry worker produces 100 additional croissants, and one extra mixing machine produces 50 extra croissants. Each pastry worker costs $30 to hire, and a mixing machine costs $10 per unit. The bakery owner should

In which case is the transition from short run to long run likely to involve the shortest chronological time period?

The firm can calculate all points on its total cost curve if it knows

Production costs for a given output will be minimized when the

Table 7-5 Table 7-5 shows short-run total cost figures for a stereo manufacturer. At what output level does short-run average total cost reach a minimum?