Unit 3 - economics

The marginal product of labor is equal to

•  the additional labor required to produce one more unit of output.
• average product when average product is at a minimum.
• the additional output produced by hiring one more unit of labor.
• the slope of a ray drawn from the origin to a point on the total product curve.

An isoquant that is

• further from the origin represents greater output.
• flatter represents the trade-offs between inputs that are poor substitutes.
• negatively sloped represents input combinations associated with Stage I of production.
• All of the above are correct.

An isocost line will be shifted further away from the origin

• if the prices of both inputs increase.
• if total cost increases.
•  if there is an advance in technology.
• All of the above are correct.

Stage II of production begins at the point

• of inflection of the total product curve.
• where average and marginal product are equal.
• where total product is at a maximum.
• where marginal product is at a maximum.

The short run is a time period in which:

• all resources are fixed.
• the level of output is fixed.
• the size of the production plant is variable
• some resources are fixed and others are variable.

The law of diminishing returns states that:

• as a firm uses more of a variable resource, given the quantity of fixed resources, Page 2 the average product of the firm will increase.
• as a firm uses more of a variable resource, given the quantity of fixed resources, marginal product of the firm will eventually decrease.
• in the short run, the average total costs of the firm will eventually diminish.
• in the long run, the average total costs of the firm will eventually diminish.

When a firm doubles its inputs and finds that its output has more than doubled, this is known as:

• economies of scale.
• constant returns to scale.
• diseconomies of scale.
• a violation of the law of diminishing returns.

Which of the following short-run cost curves declines continuously?

• Average total cost
• Marginal cost
• Average fixed cost
• Average variable cost

Breakeven analysis identifies the

• profit-maximizing level of output.
•  level of output where economic profit is equal to zero.
• level of output where marginal revenue is equal to marginal cost.
• All of the above are correct.

The slope of the total cost curve is:

• the marginal cost.
• the average product
• the marginal product.
• the fixed product.