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ECONOMICS
Supply - Ch 5
1. How does marginal product of labor change as more people are hired?
The marginal product of labor increases up to a certain point; once a certain point is reached, however, total
output still increases, but at a decreasing rate.
2. What categories of costs combine to create a firm’s total cost?
Fixed costs and variable costs combine to create total cost. Fixed costs, or overhead, are costs that are the
same no matter how much is produced. Variable costs rise or fall depending on the quantity produced.
.
3. Name and describe three factors that can cause a change in supply?
1) Changes in input costs
2) Future expectations
3) Technological changes
4) Government subsidies, taxes. and regulations
4. What circumstances cause a firm to experience diminishing marginal returns?
When output declines with each additional unit of labor. They generally result when the supply of capital
does not increase with the work force such as when there are not enough machines for the added workers to
use.
5. How does the global economy affect the supply of a good in the United States?
Global economic events such as increases in wages, technological innovation, or trade restrictions will affect
supply of goods to the United States.
Week 5 of 10.
The 4th quiz towards your midterm.
Supply - Ch 5
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