Quiz 3 Flashcards
The nineteenth-century British economist Thomas Malthus argued that the law of diminishing returns implied that
eventual misery would befall the human race
When the marginal product curve lies above the average product curve
the average product curve must be rising
Returns to scale refers to
what happens to output when all inputs are varied in some proportion
Mexican restaurant with production function Q = KL^2. How many workers would you need to use in order to minimize the cost of producing 100 burritos when the capital, K, is 25?
2
The short-run is defined as that period of time during which
one or more inputs cannot be freely varied
A fixed input is an input that
cannot be varied in the short-run
In a typical production function, the relevant factors of production are land, labor capital and
entrpeneurship
The general rule for allocating a productive resource efficiently across different production activities of the same product is to choose the allocation for which the
marginal product of the resource is the same in every activity
The rate at which one input can be exchanged for another without altering output is called
the marginal rate of technical substitution
The total fixed cost curve
is simply a horizontal line
The following is true about point A for a firm with the I2 isocast curve
the firm is minimizing the costs of production
The total fixed cost function
is horizontal
If the total variable cost curve is a straight line then the
total cost curve will also be a straight line
The vertical distance between the average variable cost and average total cost curves
decreases as quantity increases
The defining characteristic of increasing returns to scale may be summarized as
F(cK,cL) > cF(K,L)
