Total Product (Q): 0 1 2 3 4 5 6 Total Cost (TC): $50 $80 $105 $125 $155 $195 $2
ID: 1153946 • Letter: T
Question
Total Product (Q): 0 1 2 3 4 5 6
Total Cost (TC): $50 $80 $105 $125 $155 $195 $250
23 Refer to the table shown here. Diminishing marginal returns are incurred when output is increased from:
1 to 2 units of output.
2 to 3 units of output.
3 to 4 units of output.
4 to 5 units of output.
24 Long-run average cost is defined as:
the minimum average cost of producing any level of output when all inputs are variable.
the minimum average cost of producing any level of output when the amount of capital is varied and all other inputs are held constant.
the average of the short-run costs associated with each amount of capital employed by the firm.
the minimum average cost of producing any level of output when all inputs are fixed.
25 If an industry is characterized by substantial diseconomies of scale, as a particular firm in the industry expands its production capacity we will observe:
a decrease in marginal costs.
an increase in the marginal product of labor.
a decrease in the total fixed costs of production.
an increase in the average total costs of production.
26 The "minimum efficient scale" of operation in an industry is defined as:
the smallest plant size that can be operated by firms in the industry.
the scale of operation at which economies of scale are exhausted.
the smallest number of firms that could effectively meet demand for an industry's output.
the scale of operation by firms in an industry that is least efficient.
1 to 2 units of output.
2 to 3 units of output.
3 to 4 units of output.
4 to 5 units of output.
Explanation / Answer
23. Between 2 and 3 units. The marginal product of an input is the extra output produced by 1 additional unit of that input while other inputs are held constant.
24.the minimum average cost of producing any level of output when all inputs are variable.
In the long run all costs are variable. Marginal costs will increase when there are diseconomies of scale.
25
25. an increase in the average total costs of production
26. Minimum efficient scale is the scale of operation at which economies of scale are exhausted.