QUESTION 18 The law of diminishing returns indicates that O D. beyond some point, the extra utility derived from additional units of a O A the demand for goods O B. because of economies and O C. as extra units of a variable resource are added to a fixed resource, marginal product will decline beyond some point diseconomies of scale, a competitive produced by purely competitive industries is downwarde sloping product will yield the consumer firm's long-run average total cost curve will be U-shaped smaller and smaller extra amounts of satisfaction

QUESTION 18 The law of diminishing returns indicates that O D. beyond some point, the extra utility derived from additional units of a O A the demand for goods O B. because of economies and O C. as extra units of a variable resource are added to a fixed resource, marginal product will decline beyond some point diseconomies of scale, a competitive produced by purely competitive industries is downwarde sloping product will yield the consumer firm's long-run average total cost curve will be U-shaped smaller and smaller extra amounts of satisfaction

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The firm depicted in Figure 7-10 is currently at point F producing 200 units of output per day. If it decides to increase its output level to 375 units, then it will Q 40 Figure 7-10 Dollars per Unit ATC LRATC ATC 200 375 Units of Output O adjust from point F to point G in the short run O be unable to adjust to point G in the short run because some inputs are fixed O be unable to adjust to point G in the long run because no inputs are fixed O be unable to adjust to point H in the short run because some inputs are fixed O adjust from point F to point H in the long run
When large retailers like Costco offer products at a discounted price because they are able to negotiate cheaper rates with their suppliers compared to smaller competitors, they benefit from O Availability of compliments. O Learning-curve effects. O Experience-curve effects. Economies of scale.
When a firm produces one unit, the variable cost is $7. When the firm produces two units, the variable cost is $10. When the firm produces three units, the variable cost is $12. What is the marginal cost associated with three units of production? Select one: O a. 3 O b. 7 O c. 2 O d. 0
Imagine a firm in a competitive market comes up with a new production method, which halves its marginal cost at all levels of Q. Fixed costs are unaffected. Which of the following statements are true? O a. The firm's AC at all levels of Q would be lower. O b. The firm would extract an innovation rent from selling at the market price with lower costs. Oc. The firm's point of minimum AC would be a higher level of Q. O d. The innovation would immediately cause the market price to drop.
Which of the following is always true for the profit-maximizing firm in a perfectly competitive output market (as discussed in Chapter 8): O a. The economic profit at the profit maximizing output is negative. O b. The profit maximizing output is equal to the price given by the market. Oc. The economic profit at the profit maximizing output is positive. O d. At profit maximizing output, the slope of the total cost curve is equal to the slope of the total revenue curve. Say you have following Engle curve (which are the dashed lines) relating household income and pollution: FIGURE 1.-POLLUTION EMBODIED IN HOUSEHOLD CONSUMPTION: PM10 O 1984 2012 10 15 Average After-Tax Income (10,000 2002 $) Which of the following statements about this Engle curve is true in 2012? Select one: O a. Household pollution is a Giffen good. O b. Household pollution is a normal good. O c. Househald pollution is an inferior good. O d. Household pollution starts as an inferior good, and then becomes a normal good.…
5,000 Total Cost 10,000 O a.) The profit is maximized. Profit Total Revenue b.) The firm should increase output 15,000 Based on this graph, which of the following statements is true at an output of 7,000 indicated by the green line? Output Oc.) The slopes of the total revenue and total cost curves are equal. O d.) The cost is rising faster than the revenue.
A firm has a fixed production cost of $1,000 and a constant marginal cost of production of $700 per unit produced. What is the firm's total cost function? O A. TC = 1,000 + (700q) O B. TC = 1,000 + (700q). OC. TC = 700q. O D. TC = 1,000. The firm's average total cost (ATC) of production is O A. ATC = 1,000 + (700q). OB. 1,000 + (700q) ATC = Oc. 1,000 ATC = O D. ATC = 700q. O E. ATC = 700. If the firm wanted to minimize the average total cost, would it choose to be very large or very small? Explain. OA. very small because the average total cost of production rises with output. O B.- very large because the average variable cost of production falls with output. OC. very small because the average fixed cost of production rises with output. O D. very small because the total cost of production rises with output. O E. very large because the average total cost of production falls with output.
Suppose we have a firm in a perfectly competitive market. Assume that we have the usual shaped cost curves. At a market price of $15 the profit maximizing firm produces 53 units. Something changes that causes the firm to produce a quantity of zero at a price of $15 in the short-run. Which of the changes below can explain the change in the firm's behavior? O An increase in the fixed cost and a decrease in the marginal cost. O An increase in the fixed cost. O An increase in the marginal cost. O A decrease in the market price.
Exhibit 21-9 Cost MC, ATC₂ MC1 ATC1 MC 3 PI ATC 3 Quantity of Output Refer to Exhibit 21-9. Let MC 1 and ATC 1 represent the initial cost curves of a peanut butter producer. In which of the following cases is it most likely that the firm's curves will shift leftward to MC 2 and ATC 2? O a. The market price of peanuts decreases. O b. The market price of peanuts increases. O c. The government lowers taxes paid by peanut butter producers. O d. The market price of peanuts remains constant.
abus ules Marginal Marginal Output Revenue Cost se Materials aw-Hill ct 012 $18 $4 $18 $6 $18 $10 3 $18 $18 4 $18 $26 $37 ns Resources 5 $18 Refer to the data in the accompanying table. If the firm's minimum average variable cost is $17, the firm's profit-maximizing level of output would be. p O 1 03 04 02 200m
For the competitive market and the perfectly competitive firm, an efficient allocation of resources means O a.P>MC Obit is not possible to s Oc unit cost is at a maximum Od both a and b above Oe.a,band cabom sources and e someone better off without making someone else worse off
If a graph is used to compare total revenue and total cost of a perfectly competitive firm, then the horizontal axis of the graph will represent the and the vertical axis will represent OA. price, measured in dollars; quantity of goods produced O B. total costs measured in dollars; quantity of goods produced O C. quantity produced; both total revenue and total costs, measured in dollars. O D. quantity produced; total revenue and total variable costs, measured in dollars.