Exam 21: Production and Costs

Exhibit 21-14 Assume that labor is the only variable input and that each additional laborer is paid $600. -Refer to Exhibit 21-14. What is the MPP of the first unit of labor [blank (C)]?

Exhibit 21-11 ​ -Refer to Exhibit 21-11. Average variable cost at two units of output is

-For ABC, Inc., 250,000 units of output per year represent minimum efficient scale. If ABC, Inc. decides to produce 200,000 units this year, it will be operating in the region of

__________ scale exist when inputs are increased by some percentage and output increases by a smaller percentage, whereas __________ scale exist when inputs are increased by some percentage and output increases by the same percentage.

Exhibit 21-11 ​ -Refer to Exhibit 21-11. Marginal cost of the first unit of output is

Using the concept of marginal cost, explain how a parent could structure a teenager's punishment for misbehavior so as to achieve the parent's goal (for example, having the teen home by a certain time).

Economies of scale refer to

Average productivity of labor equals

Costs that do not change with output are called __________ costs.

The average-marginal rule states that if the marginal magnitude is

The law of diminishing marginal returns

When a firm is experiencing constant returns to scale, it follows that

Define economies of scale and give two reasons why firms may experience economies of scale. Is economies of scale a long-run concept or a short-run concept?

Exhibit 21-10 ​ ​ -Refer to Exhibit 21-10. Paul's marginal productivity of the fourth hour of studying is

Exhibit 21-2 ​ -Refer to Exhibit 21-2. What is the average total cost of producing 120 units of output?

Carol says the following to an economist: "I hate playing the guitar, but I have taken lessons for 10 years, so I might as well continue. There is a chance I will become a professional guitarist one day." An economist would probably make which of the following statements?

There is a link between production and cost. We know this because

Diseconomies of scale are said to exist when inputs are increased by some percentage and output increases by a(n) __________ percentage, causing unit costs to __________.

If the marginal cost (MC) curve is rising and is above the average fixed cost (AFC) curve, then

Exhibit 21-3 ​ -The law of diminishing marginal returns states that as ever larger amounts of a variable input are combined with