Problem 1: The difference between the short-run and the long-run production function is:
A. three months or one business quarter
B. the time it takes for firms to change all production inputs
C. the time it takes for firms to change only their variable inputs
D. more information is required to answer this question
Problem 2: When is it NOT in the best interest of a company to hire additional workers in the short run?
A. when the average product of labor is decreasing
B. when the firm is in Stage II of the production process
C. when the marginal revenue product equals zero
D. when the wage rate is equal to or greater than labor's marginal revenue product
Problem 3: When a firm increases its output by one unit, its AC decreases. This implies that .
A. MC < AC
B. MC = AC
C. MC < AFC
D. The law of diminishing returns has not yet taken effect
Problem 4: Which level indicates the point of maximum economic efficiency?
A. lowest point on AVC curve
B. lowest point on AC curve
C. lowest point on MC curve
D. lowest point on AFC curve
Problem 5: A firm that seeks to maximize its revenue is most likely to adhere to which of the following?
A. MR = MC
B. MR = 0
C. MR = P
D. MR < MC