Question

Question 1 Fill in the blank to make the following statements correct. 1.1 The technological relationship between the inputs of factor services and outputs is called the 1.2 A firm's planning decisions made when some inputs are variable but others are fixed are made in the time period known as the _. The time period over which all factors are variable but technology is fixed is known as the 1.3 The change in total output resulting from the use of one additional unit of the variable factor is called the 1.4 If average product (AP) and marginal product (MP) curves are plotted on a graph, the AP curve is rising as long as the MP curve lies the AP curve. The AP curve is falling when the MP curve lies the AP curve. 1.5 For given factor prices, when average product per worker is at a maximum, average variable cost is at a 1.6 Eventually diminishing marginal product of the variable factor implies eventually marginal costs. 1.7 If marginal costs are above average costs, then producing one more unit of output will average cost. the

Answer 1

Answers

1.1: Production Function

The technological relationship between the inputs of factor services and outputs is called the production function.

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1.2: Short-Run ; Long-Run

A firm's planning decisions made when some inputs are variable but others are fixed are made in the time period known as short-run. The time period over which all factors are variable but technology is fixed is known as the long-run.

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1.3: Marginal productivity of variable factor

The change in total output resulting from the use of one additional unit of the variable factor is called the marginal productivity of variable factor.

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1.4: Above; Below

If average product(AP) and marginal product(MP) 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.

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1.5: Minimum

For given factor prices, when average product per worker is at a maximum, average variable cost is at a minimum.

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1.6: Increasing

Eventually diminishing marginal product of the variable factor implies eventually increasing marginal cost.

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1.7: Increase

If marginal costs are above average costs, then producing one more unit of output will increase the average cost.

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