Quiz 11: One Input and One Output: a Short-Run Producer Model | Quiz+
One Input and One Output: a Short-Run Producer Model
In the one-input model of production, increasing marginal product implies non-convexity of the producer choice set.
If the single-input producer choice set is convex, the marginal product of labor curve must have a negative slope that is getting steeper with increases in labor input.
The law of diminishing marginal product holds so long as the input is not a Giffen good.
In the one-input model, the marginal product of labor curve falls below the horizontal axis only if the production frontier slopes down.
The output level is constant along any isoprofit line.
For price-taking producers, isoprofit curves are always parallel to one another.
In the one-input model, profit is always maximized where marginal revenue product is equal to the input price.
In the one-input model, the cost curve is the inverse of the production frontier if and only if the input price is 1.
A competitive (price-taking) firm will produce so long as its economic profit is sufficiently above zero to enable the firm to pay the owners of the firm for their time and effort.
Labor demand curves always slope down.
If income effects are sufficiently strong, it may be the case that labor demand curves slope up.
Output supply curves always slope up in the one-input model.
An increase in the wage will cause the output supply curve in the one-input model to shift in unless labor is an inferior input.
In the one-input model, a decrease in output price will always cause labor demand to shift in.
In the one-input model, a convex producer choice set implies an upward sloping marginal cost curve.
In the one-input model, the marginal cost curve is U-shaped.
Price-taking producers have horizontal marginal revenue curves.
Whenever average cost is increasing, marginal cost must also be increasing.
When single-input producer choice sets are non-convex, the first order condition of the profit maximization problem is neither necessary nor sufficient for identifying the profit maximizing production plan.
If the single-input producer choice set is fully convex, the first order conditions of the profit maximization problem are necessary but not sufficient for identifying the profit maximizing production plan.