Exam 1 Flashcards
T/F In stage III of production, marginal product is positive.
False
T/F We use interest rate as a conservative estimate for the opportunity cost of capital.
True
When marginal revenue equals the output price, the equation for Marginal Value product is what?
MR*MP
A farmer should shut down production when what price is less than what cost?
Output price is less than Average Variable Cost
T/F If the long run average cost curve is increasing in bison production, larger farms will become more profitble
False
T/F In the long run, all costs are variable.
True
What is the equation for computing marginal cost (MIC)?
Change in total cost divided by change in input
Average Product is what?
Total product divided by the input level
T/F
Marginal cost measures the change in total cost when an additional unit of output is produced.
True
T/F
With one additional inch of water, the output goes from 30 bu/acre to 40 bu/acre. The water costs 10.00/inch. The price the farmer receives is 3.00 bu. The farmer is maximizing profits.
False
T/F
When the output price is greater than average costs, profits will be positive.
True
In the Long Run, production should be discontinued whenever total revenue is what?
Total revenue is less than total cost
T/F
Profits are always maximized where inputs are maximized
False
What equation shows the profit maximizing level of output?
MR=MC
What is the equation for annual depreciation?
(Purchase cost - salvage cost)/useful life
