Economics Homework Help

1-When some factors of production are fixed (e.g., capital), in order to increase production by , a

firm would need to add successively:

A.larger and larger quantities of the variable factor.

B.constant quantities of the variable factor.

C.larger and larger quantities of the fixed factors.

D.smaller and smaller quantities of the variable factor.

2-The production function indicates:

A.The minimum production using different amounts of inputs for a fixed level of technology

B.How inefficient the firm is at production

C.The maximum production using different amounts of inputs for a fixed level of technology

D.How much labor must be used to obtain enough capital

3-if a firm is choosing between two options with costs as illustrated in the graph and the firm expects to produce Q3 units of output, it should choose:

A.Option 1 since Option 2 has a higher fixed cost

B.Option 2 since it has the lowest total cost of producing Q3

C.Option 2 but it should reduce production to Q2 to equalize the marginal costs between the two options

D.Option 1 because the firm could produce at Q1 at a lower cost and it can always choose Option 2 at a later date

4-In perfect competition we conclude that firms reach productive efficiency in the long-run because each firm produces:

A.where the ATC curve reaches its minimum point

B.where MR > MC

C.where the ATC exceeds the MC

D.as long as P exceeds AVC

5-Assuming a competitive market, if the market price of a doughnut is 10 cents, the firm will

A.produce 50 doughnuts and earn zero profit

B.produce 70 doughnuts and earn a profit of 10 cents per doughnut

C.produce 40 doughnuts and earn a loss

D.shut down because it is making losses