Exam 11: Behind the Supply Curve: Inputs and Costs

The production function provides information about:

When the long-run average total cost curve is downward-sloping as output increases, the firm has diseconomies of scale.

A firm that has lower costs per unit as it increases production in the long run has:

In the short run, as output gets larger:

The marginal product of labor is:

Use the following to answer question: -(Table: Marie's Textbook Company) Look at the table Marie's Textbook Company. Marie has fixed costs of $500 per month and hires workers for $2,000 each per month. With as much precision as possible, calculate the following: A) total cost of production when four workers are employed B) the output level that produces the lowest average total cost C) the price that Marie must charge to break even on the production of 130 textbooks

Austin's total fixed cost is $3,600 a month at his cupcake bakery. Austin employs 20 workers and pays each worker $600 a month. If labor is his only variable cost, what is Austin's total cost?

An input whose quantity can be changed in the short run is a(n) _____ input.

Kaile Cakes produces 10 cakes per day. The marginal cost of the tenth cake is $24, and average total cost of 10 cakes is $6. The average total cost of 9 cakes is:

Tankao makes Bluetooth sets for mobile devices. When 50 Bluetooth sets are produced in the short run, the average variable cost is $30. Tankao's average _____ cost is _____.

Use the following to answer questions: -(Table: Costs of Birthday Cakes) Look at the table Costs of Birthday Cakes. Assume that fixed costs are $10. What is the average total cost of 5 cakes?

When a firm has to increase its output, average total costs will increase in the short run and then decrease in the long run, after the firm has time to add physical capital.

Use the following to answer questions: -(Table: Cakes) Look at the table Cakes. Pat is opening a bakery to make and sell special birthday cakes. She is trying to decide how many mixers to purchase. Her estimated fixed and average variable costs if she purchases one, two, or three mixers are shown in the table. Assume that average variable costs do not vary with the quantity of output. How many mixers should Pat buy to get the lowest average total cost if she plans to make 100 cakes?

Use the following to answer questions: Figure: Long-Run Average Cost -(Figure: Long-Run Average Cost) Look at the figure Long-Run Average Cost. This firm has _____ in the output region from B to C.

Use the following to answer questions: Figure: The Total Product -(Figure: The Total Product) Look at the figure The Total Product. If the firm hires more than L₂ labor, the total product will _____ because the marginal product of labor is _____.

Use the following to answer questions: -(Table: Cakes) Look at the table Cakes. Pat is opening a bakery to make and sell special birthday cakes. She is trying to decide how many mixers to purchase. Her estimated fixed and average variable costs if she purchases one, two, or three mixers are shown in the table. Assume that average variable costs do not vary with the quantity of output. How many mixers should Pat buy to get the lowest average total cost if she plans to make 400 cakes?

Use the following to answer questions: -(Table: Production of Bagels) Look at the table Production of Bagels. The marginal product of the fifth worker is _____ bagels.

Assuming that all other factors of production are held constant, marginal product is the change in _____ output resulting from a one-unit change in _____.

Once diminishing returns have set in, as output increases, the total cost curve:

An input whose quantity CANNOT be changed in the short run is: