Exam 6: Production Costs

Bill lives in Montana and likes to grow zucchini. He applies fertilizer to his crops twice during the growing season and notices that the second layer of fertilizer increases his crop, but not as much as the first layer. What economic concept best explains this observation?

Marginal product measures the change in:

Exhibit 6-8  Costs schedules for producing pizza By filling in the blanks in Exhibit 6-8, the variable cost of producing 4 pizzas is shown to be equal to:

Diseconomies of scale occur when high levels of output are produced in a short period of time.

If economic profit is zero, then a normal profit is earned.

The ____ is the situation in which the marginal product of labor is greater than zero and declining as more labor is hired.

Exhibit 6-7  Cost schedule for a firm In Exhibit 6-7, by filling in the blanks it can be determined that the marginal cost of the first unit of output is:

Exhibit 6-16  Long-run average cost curves Which firm in Exhibit 6-16 displays a long-run average cost curve with diseconomies beginning at 2,000 units of output per week?

If both the marginal cost and the average variable cost curves are U-shaped. At the minimum point on the average variable cost curve, the marginal cost must be:

Applying a price of labor to the law of diminishing returns generates:

Which of the following is an example of a fixed input?

Which of the following statements is true?

During the short-run period of the production process, a firm will be:

Exhibit 6-17  Long-run average cost curve Given the short-run average total cost curves in Exhibit 6-17, what level of output per week minimizes average total cost?

The situation in which the marginal product of labor is greater than zero and declining as more labor is hired is called the law of:

Exhibit 6-12  Cost schedule for producing pizza By filling in the blanks in Exhibit 6-12, the AFC of 3 pizzas is shown to be equal to:

A firm's marginal product curve slopes downward throughout its length.

The increase in total output that results from a unit increase in one unit of a variable input is equal to the input's:

Exhibit 6-5  Workers and output data In Exhibit 6-5, the marginal product of the second worker is:

If a firm enlarges its factory size and realizes higher average (per unit) costs of production then: