AGEC 360 Final Exam questions n
answers A+ rated
What is the Factor-Factor decision problem? - correct answer ✔✔The farmer is trying to find
the optimal (least costly) combination of inputs to produce a given level of output
What is the decision rule (equation) for the Factor-Factor problem? - correct answer ✔✔MRTS
x1,x2 = -(px1 / px2)
Slope of the isoquant line - correct answer ✔✔MRTS x1,x2
to solve for it: change in x2 / change in x1
Slope of the isocost line - correct answer ✔✔-(Px1 / Px2)
How do you recognize the optimal combination of goods from a chart? - correct answer
✔✔Slope of the Isoquant line = slope of the isocost line AKA where your MRTS value equals the
-(Px1 / Px2) value
What is the Product-Product decision problem? - correct answer ✔✔The farmer is trying to find
the maximum combination of output to produce and bring to market
What is the decision rule for the Product-Product problem? - correct answer ✔✔MRPS y1, y2 = -
(Py1 / Py2)
Slope of the Production Possibilities Frontier? - correct answer ✔✔MRPS y1 , y2
to calculate: change in Y2 / change in Y1
,Slope of the Iso-Revenue Line - correct answer ✔✔-(Py1 / Py2)
What point on which cost curve indicates the shut-down price? - correct answer ✔✔The
MINIMUM point on the Average Variable Cost (AVC) curve
What does the shut-down point mean for a company? - correct answer ✔✔It is the point at
which a company can no longer meet their variable costs of production and must cease
production (shut down)
Which curves determine the break-even price? - correct answer ✔✔Where the Total Revenue
curve (TR) intersects the Total Cost curve (TC)
What does the break-even price mean for a company? - correct answer ✔✔The intersection of
the Total Revenue Curve & Total Cost Curve is the break-even price because it shows where the
cash (revenue) coming into the company equals the expenses (costs) leaving the business. That
is, they are neither making a profit nor losing money...they are breaking even!
Where is the short-run supply curve located? - correct answer ✔✔The Marginal Cost Curve
(MCC), above the minimum AVC is the company's short-run supply curve
Why isn't the entire Marginal Cost Curve (MCC) the short-run supply curve? - correct answer
✔✔Because the MCC intersets the AVC at its minimum, and below the minimum AVC the
company would have shut down/not be producing.
Which two curves help identify the profit-maximizing level of output for a firm? WHY? - correct
answer ✔✔Marginal Revenue = Marginal Cost
As long as the revenue fro producing an additional unit is greater than the cost of producing
that unit, a profit is being made
, Average Revenue = Marginal Revenue in _____________________ competition - correct answer
✔✔Perfect
What is the additional cost to produce an additional unit? - correct answer ✔✔Marginal Cost
What is the amount of variable cost per unit produce? - correct answer ✔✔Average Variable
Cost
What is the average cost to produce each unit of a certain amount of units? - correct answer
✔✔Average Total Cost
What is the total cost of producing so many units of "x"? - correct answer ✔✔Total Cost
How do you calculate Total Cost? - correct answer ✔✔Variable costs + fixed costs
How do you calculate Average Total Cost (ATC)? - correct answer ✔✔Total cost / Quantity of
Output
TC / Y
How do you calculate Average Variable Cost (AVC)? - correct answer ✔✔TVC / Y
How do you calculate Marginal Cost? - correct answer ✔✔Change in TC / Change in Y
How do you calculate Total Revenue? - correct answer ✔✔Price of Y (given) times Y (quantity)
Py(y)
How do you calculate Average Revenue? - correct answer ✔✔TR / y
answers A+ rated
What is the Factor-Factor decision problem? - correct answer ✔✔The farmer is trying to find
the optimal (least costly) combination of inputs to produce a given level of output
What is the decision rule (equation) for the Factor-Factor problem? - correct answer ✔✔MRTS
x1,x2 = -(px1 / px2)
Slope of the isoquant line - correct answer ✔✔MRTS x1,x2
to solve for it: change in x2 / change in x1
Slope of the isocost line - correct answer ✔✔-(Px1 / Px2)
How do you recognize the optimal combination of goods from a chart? - correct answer
✔✔Slope of the Isoquant line = slope of the isocost line AKA where your MRTS value equals the
-(Px1 / Px2) value
What is the Product-Product decision problem? - correct answer ✔✔The farmer is trying to find
the maximum combination of output to produce and bring to market
What is the decision rule for the Product-Product problem? - correct answer ✔✔MRPS y1, y2 = -
(Py1 / Py2)
Slope of the Production Possibilities Frontier? - correct answer ✔✔MRPS y1 , y2
to calculate: change in Y2 / change in Y1
,Slope of the Iso-Revenue Line - correct answer ✔✔-(Py1 / Py2)
What point on which cost curve indicates the shut-down price? - correct answer ✔✔The
MINIMUM point on the Average Variable Cost (AVC) curve
What does the shut-down point mean for a company? - correct answer ✔✔It is the point at
which a company can no longer meet their variable costs of production and must cease
production (shut down)
Which curves determine the break-even price? - correct answer ✔✔Where the Total Revenue
curve (TR) intersects the Total Cost curve (TC)
What does the break-even price mean for a company? - correct answer ✔✔The intersection of
the Total Revenue Curve & Total Cost Curve is the break-even price because it shows where the
cash (revenue) coming into the company equals the expenses (costs) leaving the business. That
is, they are neither making a profit nor losing money...they are breaking even!
Where is the short-run supply curve located? - correct answer ✔✔The Marginal Cost Curve
(MCC), above the minimum AVC is the company's short-run supply curve
Why isn't the entire Marginal Cost Curve (MCC) the short-run supply curve? - correct answer
✔✔Because the MCC intersets the AVC at its minimum, and below the minimum AVC the
company would have shut down/not be producing.
Which two curves help identify the profit-maximizing level of output for a firm? WHY? - correct
answer ✔✔Marginal Revenue = Marginal Cost
As long as the revenue fro producing an additional unit is greater than the cost of producing
that unit, a profit is being made
, Average Revenue = Marginal Revenue in _____________________ competition - correct answer
✔✔Perfect
What is the additional cost to produce an additional unit? - correct answer ✔✔Marginal Cost
What is the amount of variable cost per unit produce? - correct answer ✔✔Average Variable
Cost
What is the average cost to produce each unit of a certain amount of units? - correct answer
✔✔Average Total Cost
What is the total cost of producing so many units of "x"? - correct answer ✔✔Total Cost
How do you calculate Total Cost? - correct answer ✔✔Variable costs + fixed costs
How do you calculate Average Total Cost (ATC)? - correct answer ✔✔Total cost / Quantity of
Output
TC / Y
How do you calculate Average Variable Cost (AVC)? - correct answer ✔✔TVC / Y
How do you calculate Marginal Cost? - correct answer ✔✔Change in TC / Change in Y
How do you calculate Total Revenue? - correct answer ✔✔Price of Y (given) times Y (quantity)
Py(y)
How do you calculate Average Revenue? - correct answer ✔✔TR / y
