What is the Law of Diminishing Marginal Returns?
Define: TP, AP, MP. How are these terms related graphically. When do diminishing marginal returns set in?
When costs that do not change with the level of output are
divided by the output level, you have calculated
A) total cost.
B) average total cost.
C) average fixed cost.
D) marginal cost.
Marginal cost is defined as
A) total cost divided by quantity.
B) the change in total cost resulting from the production of one
additional unit of output.
C) total variable cost divided by the number of units produced.
D) average fixed cost times the number of units produced.
Colin lives in Lineville [pronounced: LAHN-vl], Alabama, and
likes to grow zucchini. He applies fertilizer to his crop twice
during the growing season and notices that the second layer of
fertilizer increases his crop, but not as much as the first
layer. What economic concept best explains this observation?
A) the law of diminishing marginal utility
B) the law of diminishing marginal returns
C) return equalization principle
D) the principal-agent problem
In the short run, if average variable costs equal $20, average
total costs equal $70, and output equals 100, then the total
fixed cost equals
A) $50.
B) $1,000.
C) $5,000.
D) $9,000.
Define long run costs. How is any given point on a long run average cost curve related to a short run cost curve?
Students often confuse (a) diminishing returns related to variable factors of production and (b) diseconomies of scale. Explain the difference between the two, and give one example of each.
What happens to total product when marginal product is negative?
What happens to average product when marginal product is greater than average product?
At what point does marginal product start to decrease?
Define: economies and diseconomies of scale. How are they depicted on the long run average cost curve? What industries have been characterized by economies of scale over the course of your lifetimes?
What three factors cause long-run cost curves to shift?
Define: TP, AP, MP. How are these terms related graphically. When do diminishing marginal returns set in?
When costs that do not change with the level of output are
divided by the output level, you have calculated
A) total cost.
B) average total cost.
C) average fixed cost.
D) marginal cost.
Marginal cost is defined as
A) total cost divided by quantity.
B) the change in total cost resulting from the production of one
additional unit of output.
C) total variable cost divided by the number of units produced.
D) average fixed cost times the number of units produced.
Colin lives in Lineville [pronounced: LAHN-vl], Alabama, and
likes to grow zucchini. He applies fertilizer to his crop twice
during the growing season and notices that the second layer of
fertilizer increases his crop, but not as much as the first
layer. What economic concept best explains this observation?
A) the law of diminishing marginal utility
B) the law of diminishing marginal returns
C) return equalization principle
D) the principal-agent problem
In the short run, if average variable costs equal $20, average
total costs equal $70, and output equals 100, then the total
fixed cost equals
A) $50.
B) $1,000.
C) $5,000.
D) $9,000.
Define long run costs. How is any given point on a long run average cost curve related to a short run cost curve?
Students often confuse (a) diminishing returns related to variable factors of production and (b) diseconomies of scale. Explain the difference between the two, and give one example of each.
What happens to total product when marginal product is negative?
What happens to average product when marginal product is greater than average product?
At what point does marginal product start to decrease?
Define: economies and diseconomies of scale. How are they depicted on the long run average cost curve? What industries have been characterized by economies of scale over the course of your lifetimes?
What three factors cause long-run cost curves to shift?
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