Unit 3 Micro

Marginal product:

• diminishes at all levels of production

• may initially increase, then diminish, but never become negative

• may initially increase, then diminish, and ultimately become negative

• is always less than average product

• is the number of additional inputs it takes to produce one output

Marginal product is:

• total product divided by the number of workers employed

• the increase in total revenue attributable to the employment of one more worker

• the increase in total cost from producing one additional output

• the increase in total output attributable to the employment of one more worker

• the percent change in quantity divided by the percent change in price

Figure A shows the number of workers and quantity of burgers produced in one hour. The marginal product of the sixth worker is:

• 180 units of output

• 30 units of output

• 15 units of output

• negative

• cannot be calculated

Refer to Figure A. With which worker does the Law of Diminishing Marginal Returns first set in?

• 1st

• 2nd

• 3rd

• 4th

• 5th

Fixed costs are:

• the costs of producing one more unit of capital (ex: machinery, tools, etc.)

• usually zero when a firm produces nothing

• average cost multiplied by the firm's output

• any cost which does not change when the firm changes its output

• the traditional out of pocket costs of doing business

The vertical distance between ATC and AVC reflects:

• the law of diminishing returns

• total fixed costs

• the average fixed cost at each level of output

• marginal cost at each level of output

• the presence of specialization

Refer to Figure B. The marginal cost of producing the 4th output is:

• $1.50

• $6

• $13.50

• $54

• $216

Refer to Figure B. The average total cost of producing 3 units of output is:

• $7

• $12

• $16

• $24

• $144

Refer to Figure B. The total variable cost of producing 5 units is:

• $61

• $48

• $37

• $24

• $7

If a firm's average total cost decreases as the firm increases its output, the firm's marginal cost must be

• greater than the average variable cost

• less than

• less than the average total cost

• decreasing

• negative