AgEc Exam 2

Q: 0 < MPP < APP

Stage 2 -Best stage - A rational consumer WOULD continue to operate at this stage

Q: MPP < 0

Stage 3 -TPP is decreasing -A rational producer would NOT continue to operate this stage

Q: MPP

MPP = Change in TPP/Change in X (TPP2 - TPP1) / (X2 - X1)

Q: Isocost Line Equation

TC = (Wage x Labor) + (Rent x K)

question

Which of the following is true about the short run?

answer

All inputs are fixed

question

An isoquant is defined by

answer

Combinations of inputs required to produce a constant quantity of output.

question

The slope of an isoquant is

answer

The Marginal Rate of Technical Substitution
(MRTS)

question

If two inputs are perfect substitutes, the MRTS is:

answer

A constant

question

he slope of an isoquant is:

answer

Equal to the ratio of marginal products

question

An isocost line is defined by:

answer

Combinations of inputs required to incur constant cost.

question

The total costs:

answer

Increase when output increases

question

A cost function is a function of:

answer

Output and Input prices

question

To minimize costs, the marginal product per dollar for each input must be:

answer

equal.

question

MRTS is the

answer

Slope of an isoquant curve

question

MRTS =

answer

Change in K/Change in L

question

If two inputs are perfect substitutes, their MRTS is

answer

Constant

question

The law of diminishing marginal returns states that

answer

As additional units of inputs are used, total physical product (TPP) will eventually decline

question

MPP > APP

answer

Stage 1
- APP still increasing
- A rational producer would NOT continue

question

0 < MPP < APP

answer

Stage 2
-Best stage
- A rational consumer WOULD continue to operate at this stage

question

MPP < 0

answer

Stage 3
-TPP is decreasing
-A rational producer would NOT continue to operate this stage

question

TPP

answer

TPP = Y (Output)
TPP = APP * X

question

APP

answer

APP = TPP/X

question

MPP

answer

MPP = Change in TPP/Change in X
(TPP2 - TPP1) / (X2 - X1)

question

Isocost Line Equation

answer

TC = (Wage x Labor) + (Rent x K)

question

Graph an Isocost

answer

a Latin phrase that means "all other things held constant"

question

ceteris paribus

answer

Step 1: % change Q / % Change P
Step 2: Change in quantity demanded/average quantity
Step 3: Percentage change in price = Change in price/average price
Step 4: Elasticity

question

Own Price-Elasticity

answer

As more of a variable resource is added to a given amount of a fixed resource, marginal product eventually declines and could become negative

question

Law of Diminishing Marginal Returns

answer

Quantity is constant in short run regardless of output level
-Land, machinery, livestock, buildings

question

Fixed Input

answer

Vary in quantity even in short run depending on output
-Fuel, energy, feed, employees

question

Variable Input

answer

All inputs are variable

question

Which of the following is true about the long run?

answer

Corn syrup vs Sugar

question

Substitutes in the production of a good

answer

Constant

question

f two inputs are perfect substitutes, their MRTS is:

answer

-Parallel Lines
-MRTS = 1

question

Perfect Substitutes Isocost

answer

All points on the isoquant line have the save level of output

question

Isoquant Line

answer

-No increase on amount produced unless both inputs increase
- Tractor and plow; you can't have a tractor without the plow

question

Perfect Compliments

answer

Y(output) = f (function of) (L, K, A)

question

Production Function

answer

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1 of 33

question

Which of the following is true about the short run?

answer

All inputs are fixed

question

An isoquant is defined by

answer

Combinations of inputs required to produce a constant quantity of output.

question

The slope of an isoquant is

answer

The Marginal Rate of Technical Substitution
(MRTS)

question

If two inputs are perfect substitutes, the MRTS is:

answer

A constant

question

he slope of an isoquant is:

answer

Equal to the ratio of marginal products

question

An isocost line is defined by:

answer

Combinations of inputs required to incur constant cost.

question

The total costs:

answer

Increase when output increases

question

A cost function is a function of:

answer

Output and Input prices

question

To minimize costs, the marginal product per dollar for each input must be:

answer

equal.

question

MRTS is the

answer

Slope of an isoquant curve

question

MRTS =

answer

Change in K/Change in L

question

If two inputs are perfect substitutes, their MRTS is

answer

Constant

question

The law of diminishing marginal returns states that

answer

As additional units of inputs are used, total physical product (TPP) will eventually decline

question

MPP > APP

answer

Stage 1
- APP still increasing
- A rational producer would NOT continue

question

0 < MPP < APP

answer

Stage 2
-Best stage
- A rational consumer WOULD continue to operate at this stage

question

MPP < 0

answer

Stage 3
-TPP is decreasing
-A rational producer would NOT continue to operate this stage

question

TPP

answer

TPP = Y (Output)
TPP = APP * X

question

APP

answer

APP = TPP/X

question

MPP

answer

MPP = Change in TPP/Change in X
(TPP2 - TPP1) / (X2 - X1)

question

Isocost Line Equation

answer

TC = (Wage x Labor) + (Rent x K)

question

Graph an Isocost

answer

a Latin phrase that means "all other things held constant"

question

ceteris paribus

answer

Step 1: % change Q / % Change P
Step 2: Change in quantity demanded/average quantity
Step 3: Percentage change in price = Change in price/average price
Step 4: Elasticity

question

Own Price-Elasticity

answer

As more of a variable resource is added to a given amount of a fixed resource, marginal product eventually declines and could become negative

question

Law of Diminishing Marginal Returns

answer

Quantity is constant in short run regardless of output level
-Land, machinery, livestock, buildings

question

Fixed Input

answer

Vary in quantity even in short run depending on output
-Fuel, energy, feed, employees

question

Variable Input

answer

All inputs are variable

question

Which of the following is true about the long run?

answer

Corn syrup vs Sugar

question

Substitutes in the production of a good

answer

Constant

question

f two inputs are perfect substitutes, their MRTS is:

answer

-Parallel Lines
-MRTS = 1

question

Perfect Substitutes Isocost

answer

All points on the isoquant line have the save level of output

question

Isoquant Line

answer

-No increase on amount produced unless both inputs increase
- Tractor and plow; you can't have a tractor without the plow

question

Perfect Compliments

answer

Y(output) = f (function of) (L, K, A)

question

Production Function

answer

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AgEc Exam 2

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