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Chapter 6 Review Questions
1. Discuss the distinction between the short run and the long run as those terms relate to production.2. Which of the following inputs would likely be classified as fixed and which as variable over a time horizon of one month? Why?
a. Ovens to the Nabisco bakeryb. Wood to the La-Z-Boy Chair Co.c. Oranges to Minute Maid Juice Co.d. Labor to a McDonald’s hamburger franchisee. Cars to Hertz Rent-a-Car Co.
3. Explain the difference between the total output of a firm and the marginal product of labor (MPL) at that firm.How are they related?4. Classify the following as fixed or variable costs for a time horizon of six months. Justify your categorization.
a. General Motors’ outlay for steelb. Pillsbury’s rent on its corporate headquartersc. The cost of newsprint for the New York Times
5. Can long-run total cost (LRTC) ever be greater than short-run total cost (TC)? Why or why not?6. Explain the U shape of a typical long-run average cost curve. Specifically, why is the curve downward sloping at lower levels of output and upward sloping at higher?
