ECON 1100 Study Guide - Midterm Guide: Demand Curve, Utility, Economic Surplus

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ochreraven500

24 Apr 2017

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Document Summary

Production function: max amount of output produced by given labor, capital, tech, q = f(l,k, short-run: one input fixed long-run: both inputs variable. Law of diminishing marginal returns: short-run problem, mpl eventually decreases b/c one input is held constant. Properties iso(cid:395)ua(cid:374)ts fu(cid:396)the(cid:396) f(cid:396)o(cid:373) o(cid:396)igi(cid:374) have highe(cid:396) (cid:395)"s iso(cid:395)ua(cid:374)ts (cid:272)a(cid:374)"t (cid:272)(cid:396)oss: slope down. Mrts: slope of isoquant, mrts = -mpl/mpk. Sunk: already paid (i. e. unavoidable currently, should(cid:374)"t i(cid:374)flue(cid:374)(cid:272)e (cid:272)u(cid:396)(cid:396)e(cid:374)t de(cid:272)isio(cid:374)s. Implicit: no physical price, e. g. time, opportunity. Isocost: shows all combos of l,k that have same cost. Cost minimization tangency condition: mrts=-w/r isoquant equation: q=f(l,k) Expansion path: connects all minimum total costs to make linear path (crs, drs shapes in after point. Economies of scale: savings in costs due to increased production first half of lrac. Diseconomies of scale increase in costs due to increased production: second half of lrac. Price taking: no one firm can influence market price take price given market supply, demand.

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