The short run is a period that is: a. less than one week. b. long enough in whic

Question

The short run is a period that is: a. less than one week. b. long enough in which to make all economic adjustments. c. long enough in which to vary output but not plant capacity. d. less than one month.

A factor of production whose quantity can be changed during a particular period is a: a. variable factor of production. b. incremental factor of production. c. marginal factor of production. d. fixed factor of production.

A farm can produce 1,000 bushels of wheat per year with 2 workers and 1,300 bushels of wheat per year with 3 workers. The marginal product of the third worker is: a. 1,300 bushels. b. 300 bushels. c. 2,300 bushels. d. 100 bushels.

At 47 units of labor, a firm finds that average product of labor equals 39.6 and marginal product of labor equals 32.9. We can conclude that the average product curve at 47 units of labor is: a. horizontal. b. downward-sloping. c. vertical. d. upward-sloping.

Question 5 The law of diminishing marginal returns holds that the: a. marginal product of any variable factor of production will at some point decline, because it will eventually become burdened with an excess and overwhelming abundance of other factors in the long run b. total product can only increase so long, because factors of production eventually become tired or wear out. c. total product of any variable factor of production will eventually decline, all other things unchanged. d. marginal product of any variable factor of production will eventually decline, assuming the quantities of other factors of production are given.

Question 6 Costs of Producing Bagels (cents) Quantity of Bagels Total Variable Costs Total Fixed Cost per period 0 0 10 1 20 2 30 3 35 4 45 5 60 6 80 7 105 8 135 the total cost of producing 6 bagels is equal to $________ and the marginal cost of the 6th bagel is $__________. a. 0.20;0.90 b. 0.80,0.20 c. 0.20; 0.20 d. 0.90; 0.20

Question 7 Marginal cost _______ over the range of increasing marginal returns and _______ over the range of diminishing marginal returns. a. increases; is constant b. is constant; rises c. falls; increases d. increases; falls

Question 8 Copy of Marginal cost _______ over the range of increasing marginal returns and _______ over the range of diminishing marginal returns. a. is constant; rises b. increases; falls c. falls; increases d. increases; is constant 2 points

Use the graph below. Point D refers to the _______ and Point E refers to the ________point. costs points.JPG a. shut down; profit maximization b. shut down; break even c. break even; shut down d. profit maximization; break even

Question 10 Use the graph below and match the curve to its correct name. cost curves.JPG Curve X Curve Y Curve V Curve W A. Marginal cost B. Average fixed cost C. Average total cost D. Average variable cost 2

Question 11 Bev's Bakery, a donut maker, has discovered that the ratio of the marginal product of labor to the price of labor is 6.5, while the ratio of the marginal product of capital to the price of capital is 6.1. The firm has determined that it does not want to change its total costs. Bev's Bakery should: a. use more capital and less labor. b. do nothing different since there is insufficient information upon which to make a decision. c. use more labor and less capital. d. do nothing; the differences in the ratios of marginal product to input price are too small to matter.

your plant is operating in the positively-sloped portion of a long-run average cost curve, this could be the result of: a. lower wages. b. economies of scale. c. improved utilization of by-products d. diseconomies of scale.

Explanation / Answer

Important note - Only Question 1 and 3 are solved as multiple questions have been asked.

Q1. Short-run is the period of time in which output can be varied (increased or decreased) by varying the quantity of variable factors such as number of workers, quantity of raw material etc. However, fixed factors such as capital equipment, factory building etc. remains unchaged as time period is considered small enough to be able to make any variations in these factors.

It takes time to build a new factory with larger capacity or to expand the existing factory.

It is changes in fixed factors that leads to change in plant capacity.

So, short-run can be stated as a period in which it is possible to vary output but not the plant capacity.

Hence, the correct answer is option (c).

Q3. Marginal product (MP) = TPn - TPn-1/Ln - Ln-1

Where, TPn = Total product when n units of labor are employed

TPn-1 = Total product when n-1 units of labor are employed

Ln = nth unit of labor employed

Ln-1 = n-1the unit of labor employed

Marginal product of third worker = 1,300 - 1,000/3 - 2 = 300/1 = 300

Hence, the correct answer is option (b).

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