Chapter 1. eFigure 7.9
eFigure
Isoquants
true
true
You must read each slide, and complete any questions on the slide, in sequence.
Question 1.1
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100
Correct! The firm’s marginal cost curve will be below the firm’s average total cost curve as long as the marginal cost is less than the average. In this range, the cost of the additional unit is less than the average, bringing the average down. The firm’s marginal cost curve will be above the firm’s average total cost curve when the marginal cost of production is greater than the average. In this range, the cost of the additional unit exceeds the average per unit cost and the average will rise.
Incorrect. The firm’s marginal cost curve will be below the firm’s average total cost curve as long as the marginal cost is less than the average. In this range, the cost of the additional unit is less than the average, bringing the average down. The firm’s marginal cost curve will be above the firm’s average total cost curve when the marginal cost of production is greater than the average. In this range, the cost of the additional unit exceeds the average per unit cost and the average will rise.
Question 1.2
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Correct! In the long run the firm is able to vary the amount of capital used, lowering their per unit costs of production at every level. This also allows the firm to lower their marginal costs of production resulting in a long-run marginal cost curve that is flatter than the individual short-run marginal cost curves.
Incorrect. In the long run the firm is able to vary the amount of capital used, lowering their per unit costs of production at every level. This also allows the firm to lower their marginal costs of production resulting in a long-run marginal cost curve that is flatter than the individual short-run marginal cost curves.
Question 1.3
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Correct! The firm seeks to minimize its costs, but it is also subject to the whims of the market. The optimal level of production will be determined by the amount of output the firm can sell. In the long run, given their desired level of production, the firm will chose the level of capital that allows it to produce at lowest cost, at a point on the long-run average total cost curve.
Incorrect! The firm seeks to minimize its costs, but it is also subject to the whims of the market. The optimal level of production will be determined by the amount of output the firm can sell. In the long run, given their desired level of production, the firm will chose the level of capital that allows it to produce at lowest cost, at a point on the long-run average total cost curve.