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

Labor is available at a wage of $10. The last worker hired by Cal's Corn Farm added 20 ears of corn, which Cal has priced at four ears for $1. What advice would you give Cal?

Marginal revenue product is essentially the additional revenue generating from selling one additional unit of output.

Constant returns to scale for a firm would imply that

If the marginal physical product of more labor is twice as high as the marginal physical product of more machinery, a rational firm should

In the short run, the firm has no more than one fixed input.

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

Are returns to a single input and returns to scale one and the same? Explain.

Figure 7-10   In Figure 7-10, the curve labeled C is

A firm's optimal input proportions may change if

The following table depicts the production relationship between units of labor and output of pepper on Pietrov's Pepper Farm. Graphically show the three zones of production corresponding to increasing, decreasing, and negative marginal product, noting the point of diminishing returns.

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

A firm practices input substitution when it

Marginal revenue product is the effect of a one-unit increase in an input on the cost of production.

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

A total product curve shows the

John Amaker owns orange groves and hires pickers for a two-week period as shown in Table 7-3. In Table 7-3, the marginal physical product of the fifth picker is

Some costs cannot be varied within a given time period. These costs are called

Table 7-2 Table 7-2 contains information on widget production. The average physical product of the seventh pound of plastic is calculated as ____.

In which zone does the total physical product reach it maximum value?

If a firm has a U-shaped long-run average cost curve,