ECN 104 Chapter Notes - Chapter 11: Root Mean Square, Average Variable Cost, Marginal Cost

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10 Apr 2017

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Is the relationship between the quantity of inputs a rm uses and the quantity of output it produces. A xed input is an input whose quantity is xed for a particular period. A variable input is an input whose quantity the rm can vary at any time. The long run is the period in which all inputs can be varied. The short run is the period in which at least one input is xed. The total product curve (or production function) shows how the quantity of output depends on the quantity of the variable input, for a given quantity of the xed input. The marginal product of an input is the additional quantity of output that is produced by using one more unit of that input. When an increase in the quantity of that input, holding the levels of all other inputs xed, leads to a decline in the marginal product of that input.

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.

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.

lemonelephant20

A short-run production function assumes that

A. the level of output is fixed.

B. at least one input is a fixed input.

C. all inputs are fixed inputs.

D. all inputs can be varied.

blushtermite201

ECN 104 Chapter Notes - Chapter 11: Root Mean Square, Average Variable Cost, Marginal Cost

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