Production & Cost Functions - Perfect Competition

Front

In the short run, which of the following is true of a firm's average total cost of production?
Options:
It is equal to marginal cost plus average variable cost.
It is equal to marginal cost plus average fixed cost.
It is equal to average fixed cost plus average variable cost.
It always increases when a firm increases production.
It is zero if the firm shuts down.

Back

It is equal to average fixed cost plus average variable cost.

Front

Which of the following relationships correctly estimates the marginal cost (MC) of production for a perfectly competitive firm in the short run? MC = P/MPL, MC = P x MPL, MC = W x MPL, MC = W/MPL, MC = MPdW

Back

MC = W/MPL

Front

JC pizzeria has a year remaining on an unbreakable lease on its building, requiring a payment of $20,000 a year. If JC operates over the next year, it estimates that its revenues will be $200,000 and that its expenses, in addition to the lease, will be $190,000. Which of the following statements is true?

Back

JC should operate, since its loss is less than its fixed cost.

Front

A firm produces truffles by using labor and capital. The price of labor is $10 per unit, and the price of capital is $20 per unit. At current output level, the marginal product of labor is 40 truffles and the marginal product of capital is 60 truffles. To reduce the total cost of producing the current quantity of truffles, how should the firm change its spending on labor and capital? LABOR .... .... CAPITAL

Back

Increase .... .... Decrease

Front

Based on the production data for picking apples, which statement about the marginal product of the fifth worker is true? It is the maximum that can be attained., It is greater than the marginal product of the first worker due to increasing returns., It is greater than the combined marginal products of all the other workers., It is less than the marginal product of the third worker due to diminishing returns., It is rising due to increasing marginal returns.

Back

It is less than the marginal product of the third worker due to diminishing returns.

Front

The average product of the third worker in the short-run production function for picking apples is...

Back

5

Front

The table shows the short-run production function for picking apples. Based on the production data, increasing marginal returns ends with worker...

Back

3

Front

The table shows the short-run production function for picking apples. Based on the production data, Marginal Cost will be at its lowest with worker...

Back

3

Front

The table shows the short-run production function for picking apples. Based on the production data, marginal product will equal average product with worker...

Back

4

Front

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

Back

less than the average total cost