ECO100Y5 Chapter Notes - Chapter 7: Diminishing Returns, Marginal Product, Marginal Cost
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The physical and mental elements of people. Raw materials from the land, water, or air. Output as a function of the amount of each input. A period of time so brief that a firm cannot change the amount of every input. When the amount of a particular input cannot be changed for a length of time, the input is known as a fixed input. A period that is long enough so that all inputs in a production process can be varied. The total amount of output that can be produced in a given period with specified amounts of input. The increasing change in output or product that results from increasing a variable input by one unit. Calculated by dividing the change in output by the change in labour. The marginal product of an input will eventually decrease as more of that input is used (assuming that all other inputs remain constant)
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The law of eventually diminishing marginal returns: (Points : 1)
a. states that each and every increase in the amount of the variable factor employed in the production process will yield diminishing marginal returns.
b. is a mathematical theorem that can be logically proved or disproved
c. is the rate at which one input may be substituted for another input in the production process
d. None of the above
b. the incremental change in total output that can be produced by the use of one more unit of the variable input in the production process c. the percentage change in output resulting from a given percentage change in the amount of the variable input X employed in the production process with Y d. None of the above |
b. the marginal rate of technical substitution c. equal to MPx/MPy d. all of the above e. none of the above |
b. equal to the marginal factor cost of the variable factor times the marginal revenue resulting from the increase in output obtained c. equal to the marginal product of the variable factor times the marginal product resulting from the increase in output obtained d. a and b e. a and c |
b. variable cost c. marginal rate of technical substitution d. total cost e. none of the above |
b. the average product of labor (L) is equal to ?2 c. if the amount of labor input (L) is increased by 1 percent, then output will increase by ?1 percent d. a and b e. a and c |
b. relevant to decisions in which one or more inputs to the production process are fixed c. not relevant to optimal pricing and production output decision facilities d. crucial in making optimal investment decisions in new production facilities e. none of the above |
b. all inputs are considered variable c. some inputs are always fixed d. capital and labor are always combined in fixed proportions |
A linear total cost function implies that: (Points : 1) |
b. average total costs are continually decreasing as output increases
c. a and b
d. none of the above