ECON300 Study Guide - Midterm Guide: Diminishing Returns, Isoquant, Substitute Good

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chocolatecod698

15 Nov 2017

School

University of Delaware

Department

Economics

Course

ECON300

Professor

Julianna Butler

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Document Summary

Marginal product measures the effect the last person hired has on output or total. Linear isoquant- the slope, or the mrts, is constant. Convex isoquant- within some range, a declining number of units of one input can be. At the point where average product begins to decline, marginal product is equal to. A production function describes the maximum output that can be achieved with any. A production input that can be varied in both the . A production input that can only be varied in the long run is called a fixed input. The marginal rate of technical substitution is likely to diminish as more and more labor is substituted for capital since the substitution of labor for capital decreases the mp l . L-shaped isoquant - the inputs are perfect complements, or that the firm is producing. In this case, the firm cannot give up one.

Related Questions

27. The Piranha Brothers Corporation produces porcelain lupines. In the long run, its production exhibits decreasing returns to scale. This decreasing returns to scale can be caused by a. management difficulties. b. a decrease in input prices. c. specialization. d. diminishing marginal returns to the variable input. c. decreasing costs.

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.

The law of diminishing marginal returns states

A) that at some point adding more of a fixed input to a given amount of variable inputs will cause the marginal product of the variable input to decline.

B) that at some point adding more of a variable input to a given amount of a fixed input will cause the marginal product of the variable input to decline.

C) that in the presence of a fixed factor, at some point average product of labor starts to fall as more and more variable inputs are added.

D) average total costs of production initially fall and after some point starts to rise at a decreasing rate as output increases.

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ECON300 Study Guide - Midterm Guide: Diminishing Returns, Isoquant, Substitute Good

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