ECON 10010 Lecture Notes - Lecture 7: Inferior Good, Production Function

21 views7 pages

5 Feb 2016

School

Department

Economics

Course

ECON 10010

Professor

Cody Forsberg

For unlimited access to Class Notes, a Class+ subscription is required.

Document Summary

Economic pro t = revenue - ex costs - implicit costs. Assumption: size of business is xed - short run. Marginal product of labor - for each additional input put into the production function, how much additional output is produced. Average cost = cost / quantity in production. Marginal cost = change in cost / change in quantity. Features: marginal cost rises - the more and more inputs we put into a factory, the more and more expensive it will be to produce additional units, u-shaped atc curve falls rapidly initially. 1: slows and turns up, avc overtakes afc. Atcatcatcatcatcatcavcavcavcavcavcavcmcmcmcmcmcmcafcafcafcafcafcafc: whenever mc < atc, atc falls. Marginal product rises and then falls: mc eventually rises, and then falls, mc crosses atc curve at minimum atc curve. Long run: can increase size/buy more equipment/open more factories. !5: a long run average total cost curve has 3 regions, in the long run, there is an in nite number of sratc that a.

Related Questions

Paul's accountant will most likely includes which of the followingcosts on his financial statements?Paul owns a car wash.
A) dividends Paulâs money was earning in the stock market beforePaul sold his stock and bought a car wash
B) All of the given answers are correct.
C) the cost of cleaning supplies
D) wages Paul could earn washing windows
2.
Farmer Jack decided to use his land to grow corn rather than use itto grow vegetables, the amount of money that he gave up by notgrowing vegetable is
A) forgone accounting profit.
B) an explicit cost.
C) an implicit cost.
D) an accounting cost
3.
Intel sold 2 million chips at a price of $10 per chip. For lastyear, the firmâs
A) explicit costs amounted to $20 million.
B) accounting profit amounted to $20 million.
C) economic profit amounted to $20 million.
D) total revenue amounted to $20 million.
4.
Mandy earned $40,000 per year in her Sales Manager job. She quither job in order to start her own catering business. To buy thenecessary equipment, she withdrew $20,000 from her savings, (whichpaid 3 percent interest) and borrowed $30,000 from her uncle, whomshe pays 3 percent interest per year. Last year she paid $25,000for ingredients and had revenue of $60,000. She asked Louis theaccountant and Greg the economist to calculate her profit forher.
A) Louis says her profit is $35,000 and Greg says she lost$5,000.
B) Louis says her profit is $34,100 and Greg says she lost$6,500.
C) Louis says her profit is $33,500 and Greg says her profit is33,500.
D) Louis says her profit is $34,100 and Greg says her profit is$6,500.
5.
In the short run
A) The firm can vary the size of its factory, but not the number ofworkers it employs.
B) The firm can vary neither the size of its factory nor the numberof workers it employs.
C) The firm can vary both the size of its factory and the number ofworkers it employs.
D) The firm can vary the number of workers it employs, but not thesize of its factory.
6.
If a firmâs production function is shown on a graph and the numberof workers hired is the only variable input, then

A) total cost is measured on the horizontal axis and the number ofworkers is measured on the vertical axis.
B) the number of workers is measured on the horizontal axis and thequantity of output is measured on the vertical axis.
C) the number of workers is measured on the horizontal axis andvariable cost is measured on the vertical axis.
D) the number of workers is measured on the horizontal axis andprofit is measured on the vertical axis.
7.
marginal cost is
A) The amount by which total cost rises when the firm produces oneadditional unit of output.
B) is calculated the same way as average cost
C) total cost minus fixed cost.
D) The amount of total cost divided by units of output.
8.
If a firm is at the efficient scale of output it means that thequantity of output is such that it
A) maximizes marginal product.
B) maximizes profit.
C) minimizes average total cost(ATC) and average variable cost isequal to ATC
D) minimizes average total cost (ATC)and marginal cost is equal tothe ATC
9.
When marginal cost is less than average total cost,
A) average total cost is rising.
B) average variable cost must be falling.
C) average total cost is falling.
D) marginal cost must be falling.
10.
Regarding a the firm's cost of production,which of the followingstatements is false?
A) Marginal cost is independent of fixed costs.
B) In the long run, there are no fixed costs.
C) Diminishing marginal product explains increasing marginalcost.
D) Economies of scale is a short-run concept.

ivoryhorse290

ECON 10010 Lecture Notes - Lecture 7: Inferior Good, Production Function

Document Summary

Get access

Related Documents

ECON 10010 Chapter Notes - Chapter 13: Production Function, Average Cost, Cost Curve

EC120 Chapter Notes - Chapter 13: W. M. Keck Observatory, Production Function, Fixed Cost

ECO 1104 Lecture Notes - Lecture 11: Marginal Cost, Marginal Product, Opportunity Cost

Related Questions