AGEC 105 Exam Questions and Answers
Graded A+
Total Physical Product - Correct answer-The total output of goods or services
produced by the firm during the current period. The total product of a wheat farmer
is the yield per acre multiplied by the number of acres harvested. Examples include
total wheat produced by a wheat producer, total pounds of milk produced by a
dairy farmer.
Average and Marginal Physical Product - Correct answer-The level of output or
total product produced by a business per unit of input used
Stage II of production - Correct answer-represents the range of interest to
economists. why stop in stage I and why produce in stage II?
Law of diminishing marginal returns - Correct answer-as successive units of a
variable input are added to a production process with the other inputs held
constant, the marginal physical product eventually decreases
Average Total Costs - Correct answer-The total costs incurred by the business in
the current period per unit of output.
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, Marginal Input costs - Correct answer-The change in the cost of a resource used in
production as more of this resource is employed.
Marginal value product - Correct answer-the change in the revenue earned by the
business as it employs an additional unit of a resource, holding other resource use
constant
Iso-cost line - Correct answer-much like the budget line for consumers, this line
reflects the particular level of expenditure for two inputs. the slope of the iso-cost
line is the ratio of the prices of the two inputs
Isoquant - Correct answer-a curve that reflects the combinations of two inputs that
will produce a specific level of output.
Marginal rate of technical substitution - Correct answer-the rate of substitution or
trade-off between two inputs in the production of a specific product, also
represents the slope of an isoquant curve
rental rate of capital - Correct answer-the cost of capital broadly defined; the price
you would have to pya to rent all the inputs used to produce the business's product
long run average cost curve - Correct answer-also known as long run planning
curve; is comprised of points on a series of short-run average cost curves,
illustrating profitability for different sizes of operations
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Graded A+
Total Physical Product - Correct answer-The total output of goods or services
produced by the firm during the current period. The total product of a wheat farmer
is the yield per acre multiplied by the number of acres harvested. Examples include
total wheat produced by a wheat producer, total pounds of milk produced by a
dairy farmer.
Average and Marginal Physical Product - Correct answer-The level of output or
total product produced by a business per unit of input used
Stage II of production - Correct answer-represents the range of interest to
economists. why stop in stage I and why produce in stage II?
Law of diminishing marginal returns - Correct answer-as successive units of a
variable input are added to a production process with the other inputs held
constant, the marginal physical product eventually decreases
Average Total Costs - Correct answer-The total costs incurred by the business in
the current period per unit of output.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
, Marginal Input costs - Correct answer-The change in the cost of a resource used in
production as more of this resource is employed.
Marginal value product - Correct answer-the change in the revenue earned by the
business as it employs an additional unit of a resource, holding other resource use
constant
Iso-cost line - Correct answer-much like the budget line for consumers, this line
reflects the particular level of expenditure for two inputs. the slope of the iso-cost
line is the ratio of the prices of the two inputs
Isoquant - Correct answer-a curve that reflects the combinations of two inputs that
will produce a specific level of output.
Marginal rate of technical substitution - Correct answer-the rate of substitution or
trade-off between two inputs in the production of a specific product, also
represents the slope of an isoquant curve
rental rate of capital - Correct answer-the cost of capital broadly defined; the price
you would have to pya to rent all the inputs used to produce the business's product
long run average cost curve - Correct answer-also known as long run planning
curve; is comprised of points on a series of short-run average cost curves,
illustrating profitability for different sizes of operations
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
