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The following question is based on this table:
What is the marginal cost of producing the fourth good?
Explanation
Marginal cost is the increase in the total cost of production to produce one additional unit. In this case, we want to determine the marginal cost of producing the fourth good. The total cost for producing three goods is 26 and the total cost for producing four goods is 29. Because total cost increases by 3, 3 is the fourth good's marginal cost.
If the total product of labor increases at an increasing rate, .
marginal product of labor is increasing.
marginal product of labor is decreasing.
marginal product of labor is constant.
marginal product of labor is at its minimum.
marginal product of labor is at its maximum.
Explanation
Marginal product of labor describes how the total product of labor changes when more labor is hired. If the total product of labor is rising as labor increases, then the marginal product of labor must be increasing.
If the United States trades computers in exchange for cars from Germany, what must be true?
The United States has comparative advantage in producing computers and Germany has comparative advantage in producing cars
The United States has comparative advantage in producing cars and Germany has comparative advantage in producing computers
The United States has absolute advantage in producing computers and Germany has comparative absolute in producing cars
The United States has absolute advantage in producing cars and Germany has absolute advantage in producing computers
None of the other answers
Explanation
Comparative advantage refers to the ability of a party to produce a particular good at a lower opportunity cost than another party. When trading, countries will always gain by trading the good in which they have comparative advantage in producing. Since the US is trading computers for cars from Germany, the US must have comparative advantage in computer production while Germany has comparative advantage in car production.
If the total product of labor increases at an increasing rate, .
marginal product of labor is increasing.
marginal product of labor is decreasing.
marginal product of labor is constant.
marginal product of labor is at its minimum.
marginal product of labor is at its maximum.
Explanation
Marginal product of labor describes how the total product of labor changes when more labor is hired. If the total product of labor is rising as labor increases, then the marginal product of labor must be increasing.
If the total product of labor increases at an increasing rate, .
marginal product of labor is increasing.
marginal product of labor is decreasing.
marginal product of labor is constant.
marginal product of labor is at its minimum.
marginal product of labor is at its maximum.
Explanation
Marginal product of labor describes how the total product of labor changes when more labor is hired. If the total product of labor is rising as labor increases, then the marginal product of labor must be increasing.
The following question is based on this table:
What is the marginal cost of producing the fourth good?
Explanation
Marginal cost is the increase in the total cost of production to produce one additional unit. In this case, we want to determine the marginal cost of producing the fourth good. The total cost for producing three goods is 26 and the total cost for producing four goods is 29. Because total cost increases by 3, 3 is the fourth good's marginal cost.
If the United States trades computers in exchange for cars from Germany, what must be true?
The United States has comparative advantage in producing computers and Germany has comparative advantage in producing cars
The United States has comparative advantage in producing cars and Germany has comparative advantage in producing computers
The United States has absolute advantage in producing computers and Germany has comparative absolute in producing cars
The United States has absolute advantage in producing cars and Germany has absolute advantage in producing computers
None of the other answers
Explanation
Comparative advantage refers to the ability of a party to produce a particular good at a lower opportunity cost than another party. When trading, countries will always gain by trading the good in which they have comparative advantage in producing. Since the US is trading computers for cars from Germany, the US must have comparative advantage in computer production while Germany has comparative advantage in car production.
If the United States trades computers in exchange for cars from Germany, what must be true?
The United States has comparative advantage in producing computers and Germany has comparative advantage in producing cars
The United States has comparative advantage in producing cars and Germany has comparative advantage in producing computers
The United States has absolute advantage in producing computers and Germany has comparative absolute in producing cars
The United States has absolute advantage in producing cars and Germany has absolute advantage in producing computers
None of the other answers
Explanation
Comparative advantage refers to the ability of a party to produce a particular good at a lower opportunity cost than another party. When trading, countries will always gain by trading the good in which they have comparative advantage in producing. Since the US is trading computers for cars from Germany, the US must have comparative advantage in computer production while Germany has comparative advantage in car production.
The following question is based on this table:
What is the marginal cost of producing the fourth good?
Explanation
Marginal cost is the increase in the total cost of production to produce one additional unit. In this case, we want to determine the marginal cost of producing the fourth good. The total cost for producing three goods is 26 and the total cost for producing four goods is 29. Because total cost increases by 3, 3 is the fourth good's marginal cost.
Use the following table to answer the question below:
| Units | Total Variable Cost | Price |
|---|---|---|
| 1 | 10 | 20 |
| 2 | 18 | 19 |
| 3 | 24 | 18 |
| 4 | 28 | 17 |
| 5 | 30 | 16 |
| 6 | 33 | 15 |
| 7 | 38 | 14 |
| 8 | 44 | 13 |
| 9 | 52 | 12 |
| 10 | 61 | 11 |
Above is a portion of the cost structure for a theoretical firm with total fixed costs of 30. Which of the following can you say about this portion of the firm's cost structure?
Increasing returns to scale
Decreasing returns to scale
Constant returns to scale
None of the other answers
Explanation
The firm's average total costs are decreasing throughout this range. Therefore, there are increasing returns to scale within this range.
| Units | Total Variable Cost | Total Cost | Avg. Cost |
|---|---|---|---|
| 1 | 10 | 40 | 40 |
| 2 | 18 | 48 | 24 |
| 3 | 24 | 54 | 18 |
| 4 | 28 | 58 | 14.5 |
| 5 | 30 | 60 | 12 |
| 6 | 33 | 63 | 10.5 |
| 7 | 38 | 68 | 9.7 |
| 8 | 44 | 74 | 9.25 |
| 9 | 52 | 82 | 9.11 |
| 10 | 61 | 91 | 9.1 |