Micro Unit 3

A production function shows the relationship between inputs and

• fixed costs

• variable costs

• total revenue

• output

• profit

Which of the following defines the short run?

• less than a year

• when all inputs are fixed

• when no inputs are variable

• when only one input is variable

• when at least one input is fixed

The slope of the total product curve is equal to the

• marginal product

• marginal cost

• average product

• average revenue

• profit

When the returns to an input are diminishing and a profit-maximizing firm chooses to hire more of that input, the total product curve has what kind of slope?

• negative and decreasing

• positive and decreasing

• negative and increasing

• positive and increasing

• positive and constant

Historically, the limits imposed by diminishing returns have been alleviated primarily by

• investments in capital and technology

• population growth

• new discoveries of land

• the teachings of Thomas Malthus

• the lessons of economic models

Diminishing returns are a common result of

• more of one input being added to a fixed quantity of another input

• the quantities of two inputs being decreased at the same time

• the quantities of two inputs being increased at the same time

• the profit of a firm being limited by increasing competition

• the profit of a firm being limited by increasing input costs

A horizontal marginal product curve would indicate that the total product curve is

• horizontal

• vertical

• downward-sloping

• upward-sloping

• downward-sloping and then upward-sloping

When a firm is producing zero output, the total cost equals

• zero

• the variable cost

• the fixed cost

• the average total cost

• the marginal cost

Marginal cost can be found at the change in either of which two types of cost when output increases by one?

• average variable cost or average total cost

• average fixed cost or average total cost

• total cost or fixed cost

• variable cost or fixed cost

• variable cost or total cost

Which of the following statements is correct about costs?

• AVC is the change in total cost generated by one additional unit of output

• MC=TC/Q

• The average cost curve crosses at the minimum of the marginal cost curve

• The AFC curve slopes upward

• AVC=ATC-AFC