Sketch graph a standard short-run production functions, and identify on it the points where the average product peaks, the marginal product peaks, the marginal product reaches zero, and the average and marginal product intersect.
What will be an ideal response?
Make sure the average product peaks at the output where the ray from the origin is tangent to the total product curve and where the marginal product passes through it. The marginal product must peak at the output where the inflection point is on the total product curve, and the marginal product reaches zero when the total product peaks.
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If the cost of producing sofas decreases, then consumer surplus in the sofa market will
a. increase. b. decrease. c. remain constant. d. increase for some buyers and decrease for other buyers.
What are the two reasons for the government to intervene in a market?
The original sales price the Rooney family paid for the Pittsburgh Steelers was
A. $2,500. B. $2.5 billion. C. $25 million. D. $2.5 million.
Suppose that Gigantic Company is increasing in size. As Gigantic Company grows, demand for inputs causes input prices to rise. It is likely that continued growth will result in:
A. economies of scale. B. reduced fixed costs. C. diseconomies of scale. D. increasing marginal returns.