Exam 5: Production and Cost Analysis in the Short Run

Data on productivity gains in the 1990s in the United States strongly suggest that a significant share of those gains was attributable to:

Production functions A and B result in the same average total costs of production.However,production function A is twice as capital intensive as production function B.In this case,all else constant:

Assume a factory that currently employs 25 workers and owns a factory with 10,000 square feet of floor space is considering doubling the size of its factory.Economists would classify this as:

A firm's short-run cost functions depend primarily on the firm's production function and the prices of the inputs to production.

Assume there is an improvement in technology that increases the marginal product of each unit of labor.This would have the effect of:

All else constant,an increase in productivity has the effect of causing:

The typical short-run production function is incapable of distinguishing among the different types of labor that might be hired by the firm.

-Refer to Scenario 2.Diminishing marginal returns starts to occur between units:

Which of the following is true of the relationship between the marginal cost function and the average total cost and average variable cost functions?

An implicit cost is defined as:

The full opportunity costs of production are calculated as the sum of both explicit and implicit costs.

Scenario 1: The following is a hypothetical short-run production function: -Refer to Scenario 1.What is the total output when 2 hours of labor are employed?

All else constant,as the amount of a firm's implicit costs increases,the difference between economic profit and accounting profit will:

The amount of output produced with an additional unit of variable input is referred to as:

Much of the empirical evidence on the behavior of costs for real-world firms suggests that:

So long as marginal cost is greater than average variable cost,both average variable cost and average total cost must increase as output is increased.

Suppose a sole proprietorship is earning total revenues of $100,000 and is incurring explicit costs of $75,000.If the owner could work for another company for $30,000 a year,we would conclude that:

If a firm experiences constant returns to the variable input in the short run:

Scenario 1: The following is a hypothetical short-run production function: -Refer to Scenario 1.What is the marginal product of the third hour of labor?

At the point where a firm incurs diminishing marginal returns,total product will begin to decline.