ECON 1900 Study Guide - Marginal Cost, Perfect Competition, Fixed Cost

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amaranthmuskrat712

21 Feb 2013

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Document Summary

Given the information in the table above, if the price of the output is what is the profit. Profit maximizing output = 3 maximizing quantity of output: a firm in a perfectly competitive industry is producing where short run marginal cost is equal to price. Total revenue is ; total short run cost is and total variable cost is . The firm"s best strategy in the short run is to: maintain output at its present level, a firm in a perfectly competitive industry is producing where short run marginal cost is greater than price. Total revenue is ; total short run cost is and total fixed cost is. The firm"s best strategy in the short run is to: decrease its output, a firm in a perfectly competitive industry is producing where short run marginal cost is equal to price. Total revenue is ; total short run cost is and total fixed cost is .

Related Questions

36) A firm encountering economies of scale over some range of output will have a:

a) rising long-run average cost curve.

b) falling long-run average cost curve.

c) constant long-run average cost curve.

d) rising, then falling, then rising long-run average cost curve.

37) When a firm doubles its inputs and finds that its output has more than doubled, this is known as:

a) economies of scale.

b) constant returns to scale.

c) diseconomies of scale.

d) a violation of the law of diminishing returns.

38) The larger the diameter of a natural gas pipeline, the lower is the average total cost of transmitting 1,000 cubic feet of gas 1,000 miles. This is an example of:

a) economies of scale.

b) normative economies.

c) diminishing marginal returns.

d) an increasing marginal product of labor.

39) If all resources used in the production of a product are increased by 20 percent and output increases by 20 percent, then there must be:

a) economies of scale.

b) constant returns to scale.

c) diseconomies of scale.

d) increasing the average total costs.

40) Economies and diseconomies of scale explain why the:

a) short-run average fixed cost curve declines so long as output increases.

b) marginal cost curve must intersect the minimum point of the firm's average total cost curve.

c) long-run average total cost curve is typically U-shaped.

d) short-run average variable cost curve is U-shaped.

jadeshark411

A. Fill in the formula for AFC, AVC, ATC, and MC at the top of the column in the gray section within the table. B. Fill in the missing values for TFC, TVC, AFC, AVC, ATC, and MC in the blue sections of the table.

Output	Total Fixed Cost	Total Variable Cost	Total Cost	Average Fixed Cost	Average Variable Cost	Average Total Cost	Marginal Cost
0			$600
5			900
10			1,150
15			1,350
20			1,600
25			1,900
30			2,275
35			2,725
40			3,375
45			4,225
50			5,325

C. Identify the efficient scale of the firm. Explain your reasoning.

Part II. Consider the values in the following table for the Winsome Widget Factory

Winsome Widget Factory
Output	Long-Run Average Total Cost
0	------------------
5	170
10	110
15	85
20	83
25	78
30	75
35	75
40	80
45	82
50	97

a. Over what output levels do the economics of scale occur? Explain.

b. Over what output levels do constant returns to scale occur? Explain.

c. Over what output levels do diseconomies of scale occur? Explain.

salmonsalmon139

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