AGEC 500 Exam 3 review questions
well answered already passed
If long-run marginal cost (LMC) is less than long run average cost (LAC), the firm experiences
____ - ANS ✔economies of scale
Consider the production function q = 2K + 3L. The isoquant for q=12 would be ____ - ANS ✔a
straight line
Which of the following affects economic cost but not accounting cost? - ANS ✔opportunity cost
Which of the following is most likely a sunk cost for an agribusiness firm? - ANS ✔cost of
research and development
Assuming we have one variable input, which of the following best describes the relationship
between AP and AVC? - ANS ✔inverse (the move in opposite directions)
The term ____ refers to the mathematical and conceptual relationship between production and
costs - ANS ✔duality
If marginal product (MP) is greater than average product (AP), the AP is ____ - ANS ✔increasing
A farmer is storing 30,000 bushels of corn. Her opportunity cost for doing this is ____ - ANS
✔equal to the return she should get if she sold the corn and invested the money from it
elsewhere
, An isoquant which is a straight line suggests that the two inputs are ____ - ANS ✔perfect
substitutes
John Deere spent about 1.4 billion in 2015 on research and development across the company.
This amount should most likely be considered a ____ - ANS ✔sunk cost
Let the production function be q = 10K + 5L. What is the marginal product of capital (MPk)? -
ANS ✔MPk = 10
A firm produces one model that is small, and one that is larger. Management must decide if it is
more efficient to produce the two models jointly or completely separate the production of the
two. Which concept would they focus on most when making this decision/ - ANS ✔economies
of scope
A cost that has been realized and cannot be recovered is called ____ - ANS ✔a sunk cost
If relevant markets are competitive, the rate of user cost of capital equals ____ - ANS ✔the
rental rate of capital
An isoquant ____ - ANS ✔shows all the combinations of inputs that can be used to produce a
certain level of output
Sheldon keeps $10,000 in a savings account. His opportunity cost for doing this is ____ - ANS
✔equal to the return he could get if he invested this money elsewhere
If marginal cost (MC) is equal to average cost (ATC), then ATC is ____ - ANS ✔at a minimum
Which of the following is most likely an accounting cost? - ANS ✔cost of pesticide used by an
apple orchard
well answered already passed
If long-run marginal cost (LMC) is less than long run average cost (LAC), the firm experiences
____ - ANS ✔economies of scale
Consider the production function q = 2K + 3L. The isoquant for q=12 would be ____ - ANS ✔a
straight line
Which of the following affects economic cost but not accounting cost? - ANS ✔opportunity cost
Which of the following is most likely a sunk cost for an agribusiness firm? - ANS ✔cost of
research and development
Assuming we have one variable input, which of the following best describes the relationship
between AP and AVC? - ANS ✔inverse (the move in opposite directions)
The term ____ refers to the mathematical and conceptual relationship between production and
costs - ANS ✔duality
If marginal product (MP) is greater than average product (AP), the AP is ____ - ANS ✔increasing
A farmer is storing 30,000 bushels of corn. Her opportunity cost for doing this is ____ - ANS
✔equal to the return she should get if she sold the corn and invested the money from it
elsewhere
, An isoquant which is a straight line suggests that the two inputs are ____ - ANS ✔perfect
substitutes
John Deere spent about 1.4 billion in 2015 on research and development across the company.
This amount should most likely be considered a ____ - ANS ✔sunk cost
Let the production function be q = 10K + 5L. What is the marginal product of capital (MPk)? -
ANS ✔MPk = 10
A firm produces one model that is small, and one that is larger. Management must decide if it is
more efficient to produce the two models jointly or completely separate the production of the
two. Which concept would they focus on most when making this decision/ - ANS ✔economies
of scope
A cost that has been realized and cannot be recovered is called ____ - ANS ✔a sunk cost
If relevant markets are competitive, the rate of user cost of capital equals ____ - ANS ✔the
rental rate of capital
An isoquant ____ - ANS ✔shows all the combinations of inputs that can be used to produce a
certain level of output
Sheldon keeps $10,000 in a savings account. His opportunity cost for doing this is ____ - ANS
✔equal to the return he could get if he invested this money elsewhere
If marginal cost (MC) is equal to average cost (ATC), then ATC is ____ - ANS ✔at a minimum
Which of the following is most likely an accounting cost? - ANS ✔cost of pesticide used by an
apple orchard
