Exam 11: One Input and One Output: a Short-Run Producer Model

Every cost-minimizing producer is profit-maximizing.

In the one-input model,a decrease in output price will always cause labor demand to shift in.

Suppose a single-input production function has initially increasing but eventually decreasing marginal product -- and suppose we know that an interior solution is profit maximizing.In this case,the first order condition for the profit maximization problem a. is necessary for identifying the profit maximizing production plan. b. is sufficient for identifying the profit maximizing production plan. c. is both necessary and sufficient for identifying the profit maximizing production plan. d. is neither necessary nor sufficient for identifying the profit maximizing production plan.

In the one-input model of production,increasing marginal product implies non-convexity of the producer choice set.

Every profit-maximizing producer is cost minimizing.

Output supply curves always slope up in the one-input model.

Suppose you solve the profit maximization problem for a single-input,price-taking producer whose technology is given by $f ( \ell )$ The labor demand function is $\ell ( w , p )$ a.Suppose $\frac { d \ell ( w , p ) } { d w } < 0$ Might $\ell ( w , p )$ in fact be the correct labor demand function? Explain. b.Suppose $\frac { d \ell ( w , p ) } { d w } > 0$ Might $\ell ( w , p )$ in fact be the correct labor demand function? Explain. c.Intuitively explain how (b)might arise from the profit maximization problem.

In the one-input model,the marginal cost curve is U-shaped.

If the single-input producer choice set is convex,the marginal product of labor curve must have a negative slope that is getting steeper with increases in labor input.