ECO 3101 Final Exam with complete solutions
law of diminishing returns - **🔰 VERIFIED ANSWERS🔰 ✔✔states that if other inputs
are fixed, the increase in output from an increase in the variable input must eventually
decline
marginal product - **🔰 VERIFIED ANSWERS🔰 ✔✔the change in total product due to a
unit change in the variable output
average product - **🔰 VERIFIED ANSWERS🔰 ✔✔total output divided by the quantity
marginal rate of technical substitution - **🔰 VERIFIED ANSWERS🔰 ✔✔-rate at which
one input can be substituted for another without altering total output
-the slope of the isoquant
DRS - **🔰 VERIFIED ANSWERS🔰 ✔✔-a proportional increase in inputs yields less than
proportional output
-uncommon
-occurs with diseconomies of scale
-LAC rises with increased input
CRS - **🔰 VERIFIED ANSWERS🔰 ✔✔a proportional increase in inputs yields equally
proportional output
IRS - **🔰 VERIFIED ANSWERS🔰 ✔✔-a proportional increase in inputs yields more than
proportional output
-economies of scale
-provides incentive for growth
-LAC declines with output
, - **🔰 VERIFIED ANSWERS🔰 ✔✔short run cost formula?
ATC curves are inside (or above) the LAC envelope, touching at one place - **🔰 VERIFIED
ANSWERS🔰 ✔✔Why do we (the book) say that the LAC curve is an "envelope" of all the
short-run ATC curves?
1-standard product
2-price takers
3-free entry
4-perfect information - **🔰 VERIFIED ANSWERS🔰 ✔✔characteristics of perfect
competition
1-control over key inputs
2-economies of scale
3-patents
4-network economies
5-government licenses - **🔰 VERIFIED ANSWERS🔰 ✔✔conditions of monopolies
- **🔰 VERIFIED ANSWERS🔰 ✔✔short run profit maximization for monopolies
shutdown condition - **🔰 VERIFIED ANSWERS🔰 ✔✔when your price is not high
enough to cover your variable costs
pecuniary diseconomy - **🔰 VERIFIED ANSWERS🔰 ✔✔-a bidding up of input prices
when industry output increases
-as Q rises, LAC rises
- **🔰 VERIFIED ANSWERS🔰 ✔✔long run profit maximization for monopolists
law of diminishing returns - **🔰 VERIFIED ANSWERS🔰 ✔✔states that if other inputs
are fixed, the increase in output from an increase in the variable input must eventually
decline
marginal product - **🔰 VERIFIED ANSWERS🔰 ✔✔the change in total product due to a
unit change in the variable output
average product - **🔰 VERIFIED ANSWERS🔰 ✔✔total output divided by the quantity
marginal rate of technical substitution - **🔰 VERIFIED ANSWERS🔰 ✔✔-rate at which
one input can be substituted for another without altering total output
-the slope of the isoquant
DRS - **🔰 VERIFIED ANSWERS🔰 ✔✔-a proportional increase in inputs yields less than
proportional output
-uncommon
-occurs with diseconomies of scale
-LAC rises with increased input
CRS - **🔰 VERIFIED ANSWERS🔰 ✔✔a proportional increase in inputs yields equally
proportional output
IRS - **🔰 VERIFIED ANSWERS🔰 ✔✔-a proportional increase in inputs yields more than
proportional output
-economies of scale
-provides incentive for growth
-LAC declines with output
, - **🔰 VERIFIED ANSWERS🔰 ✔✔short run cost formula?
ATC curves are inside (or above) the LAC envelope, touching at one place - **🔰 VERIFIED
ANSWERS🔰 ✔✔Why do we (the book) say that the LAC curve is an "envelope" of all the
short-run ATC curves?
1-standard product
2-price takers
3-free entry
4-perfect information - **🔰 VERIFIED ANSWERS🔰 ✔✔characteristics of perfect
competition
1-control over key inputs
2-economies of scale
3-patents
4-network economies
5-government licenses - **🔰 VERIFIED ANSWERS🔰 ✔✔conditions of monopolies
- **🔰 VERIFIED ANSWERS🔰 ✔✔short run profit maximization for monopolies
shutdown condition - **🔰 VERIFIED ANSWERS🔰 ✔✔when your price is not high
enough to cover your variable costs
pecuniary diseconomy - **🔰 VERIFIED ANSWERS🔰 ✔✔-a bidding up of input prices
when industry output increases
-as Q rises, LAC rises
- **🔰 VERIFIED ANSWERS🔰 ✔✔long run profit maximization for monopolists
