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The inputs that a manager uses to alter production are referred to as:
Correct answer(s):
- Variable factors
Which of the following conditions is true when a producer minimizes the cost of producing a given level of output?
Correct answer(s):
- The marginal product per dollar spent on all inputs is equal
Which of the following “costs” could a firm that wants to remain in business avoid if it halted current production?
Correct answer(s):
- Variable costs
If a firm’s production function is Leontief and the price of capital goes down the
Correct answer(s):
- Cost minimizing combination of capital and labor does not change
For the cost function C(Q) = 50 + 4Q + 2Q2, the total variable cost of producing 7 units of output is
Correct answer(s):
- 126
For the cost function C(Q) = 75 + 4Q + 2Q2, the marginal cost of producing 5 units of output is
Correct answer(s):
- 24
Suppose the production function is given by Q = 4K + 6L. What is the average product of capital when 10 units of capital and 5 units of labor are employed?
Correct answer(s):
- 7
Suppose the production function is given by Q = 2K + 5L. What is the marginal product of labor when 15 units of capital and 10 units of labor are employed?
Correct answer(s):
- 5
Suppose the production function is Q = min {3K, L}. How much output is produced when 6 units of labor and 3 units of capital are employed?
Correct answer(s):
- 6
Suppose the marginal product of labor is 10 and the marginal product of capital is 8. If the wage rate is $5 and the price of capital is $2, then in order to minimize costs the firm should use
Correct answer(s):
- More capital and less labor
Two firms producing identical products may merge due to the existence of:
Correct answer(s):
- Economies of scale
Larger firms can produce a product at lower average cost than small firms when
Correct answer(s):
- Economies of scope exist
Constant returns to scale exist when long-run average costs
Correct answer(s):
- Remain constant as output is increased
Suppose the long-run average cost curve is U-shaped. When LRAC is in the increasing stage, there exist
Correct answer(s):
- Dis economies of scale
The long-run average cost curve defines the minimum average cost of producing alternative levels of output, allowing for optimal selection of
Correct answer(s):
- All factors of production
Economies of scale exist whenever long-run average costs
Correct answer(s):
- Decrease as output is increased
When there are economies of scope between products, selling off an unprofitable subsidiary could lead to
Correct answer(s):
- Only a minor reduction in costs
When there are economies of scope between two products which are separately produced by two firms, merging into a single firm can
Correct answer(s):
- Accomplish a reduction in costs
Cost complementary exits in a multi-product cost function when
Correct answer(s):
- The marginal cost of producing one output is reduced when the output of another product is increased
The difference between average total costs and average variable costs is
Correct answer(s):
- Average fixed cost