ECON 200 Lecture Notes - Lecture 32: Marginal Product, Marginal Cost, Production Function

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erinsea-lion256

15 Nov 2016

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Department

Economics

Course

ECON 200

Professor

Byunghoon Nam

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ECON 200 Full Course Notes

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Document Summary

Econ 200 i lecture 32 production and costs. Production function: shows the relationship between the quantity of inputs used to make a good and the quantity of output of that good. Marginal product: the increase in output because of an additional unit of input, holding all other inputs constant. Marginal product of labor (mpl): (cid:3030) (cid:3028)(cid:3041)(cid:3032) (cid:3041) (cid:3044)(cid:3048)(cid:3028)(cid:3041)(cid:3047)(cid:3047) (cid:3030) (cid:3028)(cid:3041)(cid:3032) (cid:3041) (cid:3028)(cid:3029)(cid:3042)(cid:3045) The mpl is the slope of the production function. The production function gets flatter as labor increases (due to diminishing marginal product) Total cost: the sum of all costs of production. Marginal cost: the increase in total cost from an additional unit of production: marginal cost = (cid:3030) (cid:3028)(cid:3041)(cid:3032) (cid:3041) (cid:3047)(cid:3042)(cid:3047)(cid:3028) (cid:3030)(cid:3042)(cid:3046)(cid:3047) (cid:3030) (cid:3028)(cid:3041)(cid:3032) (cid:3041) (cid:3042)(cid:3048)(cid:3047)(cid:3043)(cid:3048)(cid:3047) = (cid:3031)(cid:3032)(cid:3047)(cid:3028) (cid:3031)(cid:3032)(cid:3047)(cid:3028) The mc is the slope of the total cost curve. The total cost curve gets steeper as quantity increases (due to positive mc slope) Note that the horizontal axis is labor and the vertical axis is quantity of output.

Related Questions

The law of eventually diminishing marginal returns: (Points : 1)

a. states that each and every increase in the amount of the variable factor employed in the production process will yield diminishing marginal returns.
b. is a mathematical theorem that can be logically proved or disproved
c. is the rate at which one input may be substituted for another input in the production process
d. None of the above

The marginal product is defined as: (Points : 1)

a. the ratio of total output to the amount of the variable input used in producing the output
b. the incremental change in total output that can be produced by the use of one more unit of the variable input in the production process
c. the percentage change in output resulting from a given percentage change in the amount of the variable input X employed in the production process with Y
d. None of the above

The rate at which one input X may be substituted for another input Y in a production process, while total output remains constant, is: (Points : 1)

a. the slope of the isoquant curve
b. the marginal rate of technical substitution

c. equal to MPx/MPy

d. all of the above
e. none of the above

Marginal revenue product is: (Points : 1)

a. defined as the amount that an additional unit of the variable input adds to the total revenue
b. equal to the marginal factor cost of the variable factor times the marginal revenue resulting from the increase in output obtained
c. equal to the marginal product of the variable factor times the marginal product resulting from the increase in output obtained
d. a and b
e. a and c

Marginal factor cost is defined as the amount that an additional unit of the variable unit of the variable input adds to ____________. (Points : 1)

a. marginal cost
b. variable cost
c. marginal rate of technical substitution
d. total cost
e. none of the above

In the Cobb-Douglas production function Q=aL^?1.K^?2 ______________. (Points : 1)

a. the marginal product of labor (L) is equal to ?1
b. the average product of labor (L) is equal to ?2
c. if the amount of labor input (L) is increased by 1 percent, then output will increase by ?1 percent
d. a and b
e. a and c

The short-run cost function is: (Points : 1)

a. where all inputs to the production process are available
b. relevant to decisions in which one or more inputs to the production process are fixed
c. not relevant to optimal pricing and production output decision facilities
d. crucial in making optimal investment decisions in new production facilities
e. none of the above

Theoretically, in a long-run cost function: (Points : 1)

a. all inputs are fixed
b. all inputs are considered variable
c. some inputs are always fixed
d. capital and labor are always combined in fixed proportions

A linear total cost function implies that: (Points : 1)

a. marginal costs are constant as output increases
b. average total costs are continually decreasing as output increases
c. a and b
d. none of the above

1) The supply curve of a perfectly competitive firm is

a) Its entire MC curve

b) The upward-sloping portion of its MC Curve

c) It's MC Curve above shutdown point

d) Its MR Curve

2. The Long Run supply curve in a constant cost industry is

a) Upward sloping and linear

b) Downward sloping and linear

c) Horizontal and linear

d) Concave upwards

3. The curve which shows different combinations of inputs that yield the same level of output, is called

a) An isoquant

b) An isocost curve

c) Production function

d) Production possibility curve

4. When labor used is 12 units and output is 36, then

a) The marginal product of labor is 3

b) The total product of labor is 1/3

c) The average product of labor is 3

d) None of the above

5. Say the average product of 6 workers is 15. If the marginal product of the 7^th worker is 18, then

a) Marginal product is falling

b) Marginal product is constant

c) Average product is rising

d) Average product is falling

6. Which one of the following statements is TRUE?

a) AP_L cuts the MP_L curve from above

b) MP_L cuts the AP_L curve from above, at the maximum point of the AP_L curve

c) Average and marginal product do not intersect

d) AP_L cuts the MP_L curve from below.

7. The MRTS is equal to the

a) The slope of the total product curve

b) Change in output divided by the change in labor

c) Change in output minus the size of capita

d) Ratio of the marginal products of the inputs

silvermallard649

Question 1

A firm should hire workers up to the point where

Question 1 options:

	MP = P.
	MFC = P.
	MFC = MRP.
	MP = MRP.

Question 2

If the additional revenue from hiring an additional worker equals the additional costs from hiring the extra worker, then we know that

Question 2 options:

	MFC/MPP_L = wage.
	MFC/MRP_L = 1.
	MFC = MPP_L.
	MRP_L/P = MFC.

Question 3

A firm that maximizes profits also

Question 3 options:

	pays input prices lower than other firms do.
	cuts corners in production processes so that its products are made too cheaply.
	is inefficient.
	uses the least-cost combination of resources.

Question 4

The demand curve for labor slopes down because

Question 4 options:

	firms value less efficient workers less than they value more efficient workers.
	firms must lower prices to sell the additional units of its product that the extra workers produce.
	of profit maximizing behavior.
	of the law of diminishing marginal product.

Question 5

If MFC > MRP_L, the firm should

Question 5 options:

	get rid of some capital.
	reduce the number of workers.
	lower wages.
	hire more workers.

Question 6

Which of the following will not lead to an increase in the demand for labor for a firm producing automobiles?

Question 6 options:

	A decrease in labor productivity.
	A decrease in the price of automobiles.
	A decrease in the price of robots that are used to solder parts of the car together.
	An increase in the demand for automobiles.

Question 7

The marginal revenue product gives

Question 7 options:

	the additions to total cost when an additional unit of a variable input is hired.
	the additional revenue obtained when an additional unit of a variable input is hired.
	the change in total product for an additional unit of a variable input.
	the amount that other inputs must increase by when labor increase by one unit.

Question 8

The monopolist's input demand curve is the

Question 8 options:

	marginal physical product curve.
	marginal revenue product curve.
	marginal revenue curve.
	marginal factor cost.

Question 9

An increase in product price implies that

Question 9 options:

	the firm's demand for labor increases.
	the firm's demand for labor decreases.
	the wage rate the firm pays will increase.
	the firm's marginal factor cost will increase.

Question 10

Which of the following will not lead to a change in the demand for labor?

Question 10 options:

	A change in the supply of labor.
	A change in demand for the final good.
	A change in the price of a substitute input.
	A change in labor productivity.

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