EC 301 Final Exam Questions and Answers- NCSU

EC 301 Final Exam - NCSU


Short-Run meaning - Answer-one input is fixed



Long-Run meaning - Answer-all inputs are variable



diminishing marginal returns - Answer-when the marginal gain in output diminishes as each additional
unit of input is added



Relationship between average and marginal product - Answer-Average product= total product/quantity,
Marginal Product= change in total product/change in quantity



Average product reaches its max point when it intersects with Marginal Product curve



Isoquant - Answer-a curve that shows all the combinations of two inputs, such as capital and labor, that
will produce the same level of output



Marginal Rate of Technical Substitution - Answer-the rate at which a firm is able to substitute one input
for another while keeping the level of output constant



Returns to scale - Answer-the rate at which output increases in response to proportional increases in all
inputs



Economic vs. Accounting Costs - Answer-Accounting costs are only the monetary values while Economic
costs consider the implicit costs such as opportunity costs (both consider explicit costs)