Exam 22: The Firm: Cost and Output Determination

Phil found that as he continued to crowd laborers into his hot dog stand, the extra output he was receiving from each additional laborer was beginning to fall off. This is an example of the

When Super Stuff Corporation produces 5,000 units, total costs equal $150,000 and total variable costs equal $75,000. At this level of output, what is Super Stuff's average fixed cost?

Minimum efficient scale is defined as

Why might firms experience diseconomies of scale?

-In the above table, what is the average total cost to produce 4 units of output?

If average total cost is decreasing as more and more units are produced, then marginal cost must be

Marginal costs are defined as

-Using the above table, the average physical product and marginal product when 4 workers are employed are

-Refer to the above table. What does the marginal product equal when the quantity of labor goes from 1 to 2?

-Refer to the above figure. Constant returns to scale exist

Recently Apple Computer developed Apple's new iTunes Music Store, which offers more than 200,000 songs from five major record labels, for use with Apple's iPod and iMac. More than a million songs were downloaded the first week alone! In economic terms, CEO Steve Jobs helped convert capital and labor inputs into products consumers use. Any activity that results in the conversion of resources into products that can be used in consumption is

-Using the above table, the total product and average physical product when 3 workers are employed are

-In the above table, which two workers have the same marginal physical product?

-In the above figure, point B is called

Average variable cost equals

A firm has the following production relationship between labor and output, for a fixed capital stock. -According to the above table, what is the average product of labor when five laborers are employed?

If the price of labor is constant and a firm experiences diminishing marginal product, then its

The concept of the production function implies that a firm using resources inefficiently will

Every point on the long-run average cost curve is

The law of diminishing marginal product