ECON 202 Lecture Notes - Lecture 11: Average Variable Cost, Average Cost, Diminishing Returns

23 views3 pages

lavenderfly309

16 Feb 2017

School

Department

Course

Professor

For unlimited access to Class Notes, a Class+ subscription is required.

Document Summary

12 is perfect competition iclicker: increasing variable input eventually results in a less than. Production function: relationship between the quantity of inputs a firm uses and the quantity of output it produces. Fixed input: an input whose quantity is fixed for a period of time and cannot be varied. Variable input: an input whose quantity the firm can change relatively quickly. Long run: the time period in which at least one input is variable. Short run: the time period in which at least one input is fixed. Total product curve: shows how the quantity of output depend on the quantity of the variable input, for a given quantity of the fixed inputs. The marginal product of an input: is the additional quantity of output that is produced by using one more unit of that input. iclicker: which would be considered a variable in put (in the short run) .

Related Questions

1. The slope of the total product curve measures

a. the marginal rate of technical substitution.

b. marginal product.

c. average product.

d. the maximum average product.

e. minimum product.

2. The Law of Diminishing Returns to a variable input (such as labor) assumes that

a. there is at least one fixed input.

b. all inputs are changed by the same percentage.

c. the firm is operating in the short run.

d. all inputs are held constant.

e. a and c.

3. An isoquant curve identifies

a. the maximum output possible, given a fixed budget.

b. the different combinations of goods the can be produced, given fixed amounts of inputs.

c. the different combinations of inputs that can be used to produce a fixed rate of output.

d. none of the above.

4. The ratio of total productivity to the total quantity of a variable input being used in production is

a. equal to marginal physical productivity of the input.

b. constant as employment levels of the input vary.

c. equal to average physical productivity of the input.

d. equal to the marginal rate of technical substitution.

Economists generally define the short run as being:

a. that period of time in which at least one of the first input usually, plant size is fixed.

b. that period of time in which all inputs are variable.

c. any period of less than one year.

d. any period of fewer than six months.

goldsheep41

The following table summarizes the short-run production function for your firm. Your product sells for $8 per unit, labor costs $12 per unit, and the rental price of capital is $20 per unit. Complete the following table and then answer the accompanying questions.

(a) Which inputs are fixed inputs? Which are variable inputs?

(b) How much are your fixed costs?

(d) How many units of the variable input should be used to maximize profits? Why?

(e) What are your maximum profits?

(f) Over what range of variable input usage does increase marginal returns exist?

(g) Over what range of variable input usage does decrease marginal returns exist?

Output	Units of Capital	Units of Labor	Marginal Product of Labor	MRP of Labor
0	6	0	--
10	6	1
30	6	2
60	6	3
80	6	4
90	6	5
95	6	6
95	6	7
90	6	8
80	6	9
60	6	10
30	6	11

lilacantelope948

ECON 202 Lecture Notes - Lecture 11: Average Variable Cost, Average Cost, Diminishing Returns

Document Summary

Get access

Related Documents

ECON 202 Lecture Notes - Lecture 11: Diminishing Returns, Marginal Cost, Fixed Cost

ECON 202 Study Guide - Final Guide: Marginal Utility, Nash Equilibrium, Normal-Form Game

ECON 202 Lecture Notes - Lecture 12: Market Power, Taipei Metro, Marginal Revenue

Related Questions