INTRODUCTION TO PRODUCTION AND RESOURCE USE CHAPTER SIX 107 ates nal TESTING YOUR ECONOMIC QUOTIENT 1. Please insert the appropriate labels in the blanks in 5. If MR = 10, then what is the quantity produced, ith the following graph. Examine the graph carefully average total cost, average variable cost, total cost, tal to note all labels. Then clearly indicate below the total variable cost, and profit (loss) at this point? graph the particular significance of point A, point 6. Define in words and write the formula for TFC, B, and point C. TC, TVC, MC, AVC, ATC, and AFC. There may Dollars be more than one formula for each one. 7. Fill in the missing cells. Assume the firm operates in a perfectly competitive environment in both the input and output markets. Calculate the profit (loss) when the firm receives $0.40 for the product. Q P(L) TFC TVC TC MC ATC AVC AFC 2 40 5 110 65 80 .375 90 150 8. List four conditions for perfect competition. a. Quantity b. 2. Define the supply curve of a perfectly competitive C. d. firm. 9. The following information pertains to a produc- Dollars tion schedule for sorghum from a West Texas farm. 10 MC Sorghum ATC Land Fertilizer Yield Stage of (Acres) (Pounds) (Tons) MPP APP Production 4 40 68 AVC A . 75 1.25 3 a. Which input is the variable input? b. Which input is the fixed input? c. Fill in the blanks in the table. 10. Complete the following table: 75 100 150 Quantity Input Output TFC TVC TC MC AFC AVC ATC Use the preceding graph to answer questions 3 through 5. 2 20 100 125 3. Find the shutdown point. What is the quantity 40 10 produced, average total cost, average variable cost, total cost, total variable cost, and profit (loss) at this point? 11. A profit-maximizing firm will use an input up to 4. Find the break-even point. What is the quantity the point where the cost of the input equals the produced, average total cost, average variable cost, marginal revenue received by the firm. T F total cost, total variable cost, and profit (loss) at 12. Marginal cost is the additional cost created by the this point? next or marginal unit of the variable input. T FINTRODUCTION TO PRODUCTION AND RESOURCE USE 108 CHAPTER SIX d. The amount of extra output that is produced when one worker is added and other factors of are those costs that do not production are increased proportionally. vary with input changes. 14. The firm's supply curve is represented by the 16. Which of the following would provide the best that lies above the evidence that a commodity is being produced firm's under conditions of perfect competition? 15. The marginal physical product of labor is a. The demand curve facing any one producer is a. The output which labor could produce without perfectly elastic. Ec b. The supply curve is perfectly inelastic. other factors of production. c. The production of the commodi nmodity is large, an b. The additional revenue received by the firm by selling the output of one additional worker. d. The profits of producers are low. c. The amount of extra output that is produced when one extra worker is added and other fac- Chapt tors of production are held constant. CONCE ISOQL Rate THE ISO LEAST-C GIVEN Short - Effects LEAST-C BUDG LONG-R USE 1 Long-F The Lo ECONO EXPAN Capita The exar input to tant pro maximi discussic ing the after the In labor use practice cides (a intensive things as As intensive for farm quences