Exam 7: Costs

A production possibilities frontier that is bowed-inward implies

If average cost is positive,

In the long run,fixed costs are

In the short run,marginal cost is minimized when

Why might a police officer not pull over someone speeding two miles over the speed limit?

Variable costs are

Suppose each worker must use only one shovel to dig a trench,and shovels are useless by themselves.In the short run,an increase in the price of shovels will result in

At the XYZ Co.,a unit of capital costs 3 times as much as a unit of labor.If the isoquants are convex,and the firm does not change its input mix in the long run,we can conclude that

"If the wage rate paid to one form of labor is twice the cost of another form of labor,the first type of labor must be twice as productive." Comment.

The slope of the isoquant tells the firm how much

If a pharmaceutical firm is researching ways to improve its heartburn medicine and discovers a technique that will improve its allergy medicine,one could conclude that economies of scope exist in that industry.

A firm's cost curve is determined by

Learning by doing will result in

Short-run average cost exceeds long-run average cost only when there are economies of scale.

The long-run average cost curve may initially slope downward due to

In the short run,marginal cost is increasing when

-The above figure shows the long-run expansion path.The long-run average cost curve will be

If an isocost line crosses the isoquant twice,a cost minimizing firm will

What is one possible reason a firm that produces balloons might outsource its accounting department?

You have two career options.You can work for someone else for $50,000 a year,or,you can run your own business,with an annual revenue of $100,000,and explicit costs of $40,000 annually.Explain which career option a profit-maximizer would select and why.