Question

In a widget factory, the producer is able to produce 40 widgets per day when she hires two workers. The producer is able to produce 70 widgets per day when she hires three workers. If diminishing marginal product occurs with the fourth worker then the producer is able to produce less than 100 widgets per day when she hires four workers.

True

False

In the short run total costs include both fixed costs and variable costs. Rent paid on the factory that produces wooden tables is a fixed cost and the cost of the wood to make the tables is a variable cost of production.  

True

False

Average total cost is the cost of a typical unit of output if total cost is divided evenly over all the units produced

true

False

Answer 1

In a widget factory, the producer is able to produce 40 widgets per day when she hires two workers. The producer is able to produce 70 widgets per day when she hires three workers. If diminishing marginal product occurs with the fourth worker then the producer is able to produce less than 100 widgets per day when she hires four workers.

True

It is true because marginal product of third worker is 30, and diminishing marginal product sets with the fourth worker. In that case, widget factory will be able to produce less 100 widgets per day.

In the short run total costs include both fixed costs and variable costs. Rent paid on the factory that produces wooden tables is a fixed cost and the cost of the wood to make the tables is a variable cost of production.  

True

It is true because a fixed cost is the one that does not change in total with output. For example, the rent paid on the factory. Since it will not change when there are changes in the amount of output.

Average total cost is the cost of a typical unit of output if total cost is divided evenly over all the units produced

True

It is true because average cost is the per unit cost. It is calculated by dividing the total cost by units of output produced.