10 Questions
What does the average cost (AC) represent in production?
Total cost divided by total variable costs
Why do the AC and AVC curves assume a U-shape in the short run?
Because of variable proportions
What do marginal costs of production refer to?
Additional costs incurred to produce one more unit of a commodity
Why do the short-run marginal and average variable cost curves mirror the marginal product and average product of the variable input?
Due to the law of variable proportions
In the long run, what influences the choice of inputs in the production process?
The relative costs of a factor of production
What does the marginal product of a variable factor measure?
Change in total product resulting from an additional unit of a variable factor
According to the law of diminishing marginal returns, what happens when more of a factor is added while holding other factors constant?
Per unit returns decrease eventually
In the short run, when does diminishing returns occur?
When one factor is fixed
How does technological change impact the production function?
Shifts the production function upward
What are fixed costs in production economics?
Costs that are constant regardless of output level
Test your knowledge on production functions, total product, average product, and marginal product in economics. Understand the concepts of maximizing quantity of commodities, total output, and productivity when combining different factors of production.
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