7.3 Q\'S Merged - MyEconLab questions with answers PDF

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MyEconLab questions with answers...

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Student: Tasneem Hoque Instructor: Mrittika Shamsuddin Date: 04/10/20

Course: ECON 1101 - Principles of Microeconomics Book: Ragan: Microeconomics, Sixteenth Canadian Edition Time: 23:24

1. Fill in the blanks to make the following statements correct. a. As more of a variable factor is used in combination with given quantities of fixed factors, the marginal product of the variable factor will eventually decrease. This hypothesis is known as the law of diminishing marginal returns . b. The change in total output resulting from the use of one additional unit of the variable factor is called the marginal product . c. If the average product and marginal product curves are plotted on a graph, the AP curve is rising as long as the MP curve lies

above the AP curve. The AP curve is falling when the MP curve lies below the AP curve.

d. Consider a firm whose only variable factor is labour. As the firm hires more labour, the point of diminishing marginal productivity sets in once the marginal product of labour reaches a maximum . e. As more and more labour is applied to a fixed amount of physical capital, we can expect that the marginal product of labour will eventually fall

. In the extreme, if total output decreases as additional labour is added, then the marginal

product of labour has become negative

7.3 Study Exercise 2 (Static)

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Student: Tasneem Hoque Instructor: Mrittika Shamsuddin Date: 04/10/20

Course: ECON 1101 - Principles of Microeconomics Book: Ragan: Microeconomics, Sixteenth Canadian Edition Time: 23:29

2. Fill in the blanks to make the following statements correct. a. For given factor prices, when average product per worker is at a maximum, average variable cost is at a minimum . b. If marginal costs are above average costs, then producing one more unit of output will increase the average cost. c. Average variable cost curves are U-shaped because eventually diminishing average product of the variable factor implies eventually

increasing average variable costs.

d. Eventually diminishing marginal product of the variable factor implies eventually

increasing marginal costs.

e. The level of output that corresponds to a firm's minimum short-run average total cost is called thecapacity

of

the firm. f. Consider a firm whose only variable cost is labour. A wage increase will lead to a shift upward of which of the following curves? (Select all that apply.) A. Marginal Cost B. Average Fixed Cost C. Marginal Product D. Average Total Cost E. Average Variable Cost

7.3 Study Exercise 3 (Static)

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Student: Tasneem Hoque Instructor: Mrittika Shamsuddin Date: 04/10/20

Course: ECON 1101 - Principles of Microeconomics Book: Ragan: Microeconomics, Sixteenth Canadian Edition Time: 23:32

3. Timber Products Inc. processes raw lumber into finished building products. The capital equipment used to mill the wood requires at least 7 workers if the firm is to produce output at the lowest possible unit cost. Describe the likely path of the marginal product and average product of labour as this firm increases its workforce from3 to7 workers and then to13 . As the firm increases its workforce from3 to7 workers, the marginal product of labour would most likely increase over most of this interval and then decrease and the average product of labour would most likely increase

. As the firm increases its workforce from 7 to 13 workers, the marginal product would most likely

decrease over this entire interval decrease

and the average product of labour would most likely

. The marginal product curve must be above the average product curve when the latter is rising. When the

average product begins to fall, the marginal product must be below

it. The marginal product curve will intersect the

average product curve at its maximum .

7.3 Study Exercise 6 (Algo)

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Student: Tasneem Hoque Instructor: Mrittika Shamsuddin Date: 04/10/20

Course: ECON 1101 - Principles of Microeconomics Book: Ragan: Microeconomics, Sixteenth Canadian Edition Time: 23:33

4. Suppose LeBron James (an NBA star) averages26 points per game going into the last game of the season, in which he collects only 17 points. Use the concepts of marginal and average to describe the effect on this player's stats. LeBron's marginal score is

17

have decreased . His average score falls

7.3 Study Exercise 7 (Algo)

. When LeBron's average is recalculated after the last game, his average will because his marginal score is below

his average.

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Student: Tasneem Hoque Instructor: Mrittika Shamsuddin Date: 04/10/20

Course: ECON 1101 - Principles of Microeconomics Book: Ragan: Microeconomics, Sixteenth Canadian Edition Time: 23:35

5. The cost curves for a firm producing a digital product such as an app, an online course, or an e-book are quite different than those of a firm producing a physical product such as clothing or food or furniture. Explain the difference in terms of marginal costs. For the firm producing a physical product, the marginal cost curve is U-shaped present . For the firm producing digital products, the marginal cost curve is flat

since diminishing returns are since diminishing returns

are absent .

7.3 Study Exercise 9 (Static)

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Student: Tasneem Hoque Instructor: Mrittika Shamsuddin Date: 04/10/20

Course: ECON 1101 - Principles of Microeconomics Book: Ragan: Microeconomics, Sixteenth Canadian Edition Time: 23:45

6. Wacky Wintersports Inc. can produce snowboards according to the following schedule.

Inputs of Number of Labour Snowboards (per (per week) week) 0 0 1 2

Average Product 2

2

5

2.5

3

9

3

4

14

3.5

5

20

4

6

23

3.8

7

25

3.6

8

26

3.3

and the

Marginal Product 2 3 4 5 6 3 2 1

(Round your responses for the marginal product to the nearest whole numbers and round your responses for the average product to one decimal place.)

6

Average and marginal product (units of snowboards)

a. Complete the table by calculating the .

6 D

5.5 5 4.5 4 3.5 AP

3 2.5 2 1.5

MP

1 0.5 4.5

0 0

1

2

3

4

5

6

7

8

9

10

Inputs of labour (per week)

b. 1.) Using the multipoint curve drawing tool, plot the AP and MP curves on a single graph. Remember to plot the value for MP at the midpoint of the output intervals. Use all the values provided in the table to draw the curve. Properly label the lines. 2.) Use the point drawing tool to identify the point of diminishing marginal product. Label this point "D." Carefully follow the instructions above, and only draw the required objects.

7.3 Study Exercise 12 (Algo) $N

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Student: Tasneem Hoque Instructor: Mrittika Shamsuddin Date: 04/11/20

Course: ECON 1101 - Principles of Microeconomics Book: Ragan: Microeconomics, Sixteenth Canadian Edition Time: 00:11

7. The table below shows how the total output of skates (per month) changes when the quantity of the variable input (labour) changes. The firm's amount of capital is fixed.

Hours of Pairs of Labour Skates (per month) (per month)

Average Product

100

200

2

120

260

2.2

140

340

2.4

160

440

2.8

180

520

2.9

200

580

2.9

220

620

2.8

240

640

2.7

Marginal Product         3 4 5 4 3 2 1

(Round your responses for the average product of labour to one decimal place and round your responses for marginal product of labour to the nearest whole number.)

Average and marginal product (pairs of skates)

a. Compute the of labour for each level of output and the of labour for each interval (that is, between 100 and 120 hours, between 120 and 140 hours, and so on). Fill in the table below.

5 4.5 4 3.5

MP

3 2.5 2 AP

1.5 1 0.5 0 80

100

120

140

160

180

200

220

240

Inputs of labour (per month)

b. Use the multipoint curve drawing tool to plot the AP and MP curves on a scale diagram. Remember to plot the value for MP at the midpoint of the input intervals. Use all the values provided in the table above to draw the curve. Properly label the lines. Carefully follow the instructions above, and only draw the required objects. c. Is the "law of diminishing marginal returns" satisfied? A. Yes, because the marginal and average product both decline as output increases. B. Yes, because the marginal product eventually declines as output increases. C. No, because the marginal product increases as output increases. D. Yes, because the average product declines as output increases. d. What is the relationship between the marginal product of labour and the average product of labour? A. The average product will rise if the marginal product is above it and fall if the marginal product is below it. The marginal product 7.3 StudyBExercise 14 (Algo) $N will rise if the

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B. The marginal product will rise if the average product is falling and rise if the average product is rising. C. The marginal product will rise if the average product is above it and fall if the average product is below it. D. The average product will rise if the marginal product is rising and fall if the marginal product is falling.

7.3 Study Exercise 14 (Algo) $N

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Student: Tasneem Hoque Instructor: Mrittika Shamsuddin Date: 04/11/20

Course: ECON 1101 - Principles of Microeconomics Book: Ragan: Microeconomics, Sixteenth Canadian Edition Time: 00:17

8. This question requires you to understand the relationship between total product, average product, and marginal product. Each of the accompanying diagrams shows how total product (TP) changes as the quantity of the variable input (which we call L) changes. These reflect four different production functions.

Slope = 3.0

Case (iii) Total Product

Case (ii) Total Product

Total Product

Case (i)

Slope = 1.6 10

Labour

Labour

 

    

Labour   

Total Product

Case (iv)

Slope = 1 2 10 Labour

a. Describe in words how total output depends on the amount of variable input for case (ii)? A. Output increases proportionately with input up to 10 units of input and then does not increase. B. Input increases proportionately with output up to 10 units of output and then does not increase. C. Input increases negatively with output up to 10 units of output and then does not increase. D. None of the above give a correct description. Describe in words how total output depends on the amount of variable input for case (iii)? A. Output increases at an increasing rate as input increases. B. Output increases at a decreasing rate as input increases. C. Output increases negatively with input up to 10 units of output and then does not increase. D. None of the above give a correct description.

D

AP

AP, MP

C

AP, MP

b. Which of the graphs at the right represents the marginal and average products for case (iii)? (Recall that AP is given by total output divided by total variable input. The value of AP is also equal to the slope of a straight line from the origin to the TP curve. Recall that MP is given by the change in total output divided by the change in the variable input. The value of MP is also equal to the slope of a tangent line to the TP curve.)

MP

MP L

AP L

A. Graph D B. Graph C

7.3 Study Exercise 15 (Algo)

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Which of the graphs at the right represents the marginal and average products for case (ii)?

AP, MP

B. Graph B

B MP AP

AP, MP

A. Graph A

A

1.6

MP = 10 10 AP = 0

10 L

L

c. The general relationship between AP and MP is satisfied by which of the production functions? A. All cases B. Case (iv) C. Cases (i) and (iii) D. None of the cases

7.3 Study Exercise 15 (Algo)

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Student: Tasneem Hoque Instructor: Mrittika Shamsuddin Date: 04/11/20

Course: ECON 1101 - Principles of Microeconomics Book: Ragan: Microeconomics, Sixteenth Canadian Edition Time: 00:40

9. In 1921 a classic set of experiments with chemical fertilizers were performed at the Rothampsted Experimental Station, an agricultural research institute in Hertfordshire, England. Researchers applied different amounts of a particular fertilizer to 10 apparently identical plots of land. The results for one test, using identical seed grain, are listed in the table. Compute the of fertilizer.

7 6.9 6.5

DA

6 5.5 5

Output Index *

Average Product

Marginal Product 0.310

1

15

104.2

6.9

2

35

110.4

3.2

3

55

118.0

2.1

4

75

125.3

1.7

5

95

130.2

1.4

6

115

131.4

1.1

7

135

131.9

1.0

8

155

132.3

0.9

9

175

132.5

0.8

10

195

132.6

0.7

0.380

4.5 4

Output

Fertilizer Plot Dose

3.5

0.365

3

0.245

2.5

0.060

2

0.025 0.020

1.5 A

1

0.010 0.005

*Output without fertilizer = 100 (Round your responses for marginal product to three decimal places and round your responses for average product to one decimal place.)

0.5 0.38

MP

15

0 10

30

45DM 50 70

90

110

130

150

170

190

Fertilizer dose

1.) Use the multipoint curve drawing tool to plot the AP and MP curves on a scale diagram. Remember to plot the value for MP at the midpoint of the output intervals. Use all the values provided in the table above to draw the curves. Properly label the lines. 2.) Use the point drawing tool to plot the (approximate) points of diminishing average and marginal productivity. Label these points "DA" and "DM," respectively. Carefully follow the instructions above, and only draw the required objects. After studying the results of the experiment and computing the average product for the first ten plots, you can conclude that average product is

decreasing

. From this we can

conclude that the marginal product is below the average product.

7.3 Study Exercise 16 (Algo) $N

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Student: Tasneem Hoque Instructor: Mrittika Shamsuddin Date: 04/11/20

Course: ECON 1101 - Principles of Microeconomics Book: Ragan: Microeconomics, Sixteenth Canadian Edition Time: 00:41

10. The output level at which diminishing marginal returns begins occurs where A. the average product curve begins to fall. B. the total product curve begins to fall. C. the marginal product curve has a downward slope and intersects the average product curve. D. the marginal product curve is abovethe average product curve for the first time. E. marginal product is at its maximum.

7.3 Question 35 (Algo)

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Student: Tasneem Hoque Instructor: Mrittika Shamsuddin Date: 04/11/20 11. If the

Course: ECON 1101 - Principles of Microeconomics Book: Ragan: Microeconomics, Sixteenth Canadian Edition Time: 00:41

t is 4 units and the marginal product is 6 units, the

A. average product will rise. B. marginal product will rise. C. average product will fall. D. marginal product will fall.

7.3 Question 36 (Algo) $N

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Student: Tasneem Hoque Instructor: Mrittika Shamsuddin Date: 04/11/20

Course: ECON 1101 - Principles of Microeconomics Book: Ragan: Microeconomics, Sixteenth Canadian Edition Time: 00:43

12. The following data show the total output for a firm when specified amounts of labour are combined with a fixed amount of capital. Assume that the wage per unit of labour is $ 20and the cost of the capital is $100. Labour per unit of time 0 1 2 3 4 5 The

Total Output    0     25     75 174 249 304

of labour is at its maximum when the firm changes the amount of labour hired from

A. 0 to 1 unit. B. 2 to 3 units. C. 3 to 4 units. D. 1 to 2 units. E. 4 to 5 units.

7.3 Question 37 (Algo) $N

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Student: Tasneem Hoque Instructor: Mrittika Shamsuddin Date: 04/11/20

Course: ECON 1101 - Principles of Microeconomics Book: Ragan: Microeconomics, Sixteenth Canadian Edition Time: 00:47

13. The graphs to the right represent total product, marginal product and average product of the firm.

A. from 0 to 20 units of output. B. from 0 to 43 units of output. C. between 192 to 214 units of output. D. between 192 to 252 units of output. E. over the whole production range.

Output Total Product

Total product is increasing at a decreasing rate

280 260 240 220 200 180 160 140 120 100 80 60 40 20 0 0 1 2 3 4 5 6 7 8 9 10 11 1213 1415

Output Marginal Product and Average Product

Units of labour

44 42 40 38 36 34 32 30 28 26 24 22 20 18 16 14 12 10 8 6 4 2 0 0 1 2 3 4 5 6 7 8 9 10 11 1213 14 15

Units of labour

7.3 Question 38 (Algo)

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