Distinguish the short run from the long run. Generally, what causes costs of production to vary with output in the short run? What generally causes costs of production to vary in the long run?
What will be an ideal response?
The short run is any amount of time in which at least one resource is fixed. In the short run there are some fixed costs. In the long run, nothing is fixed. There are no fixed costs in the long run. Costs of production vary with output in the short run because of increasing and diminishing returns. Costs of production vary with output in the long run because of economies and diseconomies of scale.
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Clifford lives by the motto "Eat drink and be merry today, for tomorrow doesn't matter
" If today's consumption is represented by "x" and tomorrow's consumption is represented by "y", then which of the following best represents Clifford's utility function? A) U = x - y B) U = x/y C) U = x D) U = y
Marginal costs are defined as
A. the change in the decisions that are made by households and firms. B. costs that are viewed as marginal; of little or small importance. C. the change in total costs due to a one-unit change in production. D. costs that represent a change, but one that cannot be measured correctly.
At the profit-maximizing level of output for a monopolist:
A. Price is greater than marginal cost B. Price is greater than average revenue C. Average total cost equals marginal cost D. Total revenue is greater than total cost
Figure 4.3 illustrates the demand for tacos. An increase in price of tacos would bring about a movement from
A) point a to point c. B) point c to point a. C) D2 to D0. D) D0 to D1.