43. Consider the following statements when answering this question

I. The marginal cost curve intersects the average total cost and average variable cost curves at their minimum values.

2. When a firm has positive fixed costs, the output level associated with minimum average variable costs is less than the output associated with minimum average total costs. I and II are both true.

44. In the long run, which of the following is considered a variable cost? all of the above.

45. An isocost line reveals the input combinations that can be purchased with a given outlay of funds.

46. Assume that a firm spends $500 on two inputs, labor (graphed on the horizontal axis) and capital (graphed on the vertical axis). If the wage rate is $20 per hour and the rental cost of capital is $25 per hour, the slope of the isocost curve will be ‑4/5.

47. Which of the following is NOT an expression for the cost minimizing combination of inputs?

1. MRTS = MP_L /MP_K.

48. When an isocost line is just tangent to an isoquant, we know that output is being produced at minimum cost.

49. The total cost of producing a given level of output minimized when the ratio of marginal product to input price is equal for all inputs.

50. A firm's expansion path is

1. A curve that shows the least‑cost combination of inputs needed to produce each level of output for given input prices.

51. The curve in the diagram is called

the expansion path.

52. At the optimum combination of two inputs,

1. All of the above.

53. Suppose that the price of labor ( ) is $10 and the price of capital ( ) is $20. What is the equation of the isocost line corresponding to a total cost of $100?

1. 100 = 10L + 20K

54. With its current levels of input use, a firm’s MRTS is 3 (when capital is on the vertical axis and labor is on the horizontal axis). This implies the marginal product of labor is 3 times the marginal product of capital.

55. A firm employs 100 workers at a wage rate of $10 per hour, and 50 units of capital at a rate of $21 per hour. The marginal product of labor is 3, and the marginal product of capital is 5. The firm could reduce the cost of producing its current output level by employing more labor and less capital.

56. An effluent fee is imposed on a steel firm to reduce the amount of waste materials that it dumps in a river. Use the following two statements to answer this question:

I. The more easily factors of production can be substituted for one another (for example, capital can be used to reduce waste water), the more effective the fee will be in reducing effluent.

II. The greater the degree of substitution of capital for waste water, the less the firm will have to pay in effluent fees.

1. Both I and II are true.

57. A firm wants to minimize the total cost of producing 100 tons of dynamite. The firm uses two factors of production, chemicals and labor. The combination of chemicals and labor that minimizes production costs will be found where the production of an additional unit of dynamite costs the same regardless of whether chemicals or labor are used

58. A plant uses machinery and waste water to produce steel. The owner of the plant wants to maintain an output of 10,000 tons a day, even though the government has just imposed a $100 per gallon tax on using waste water. The reduction in the amount of waste water that results from the imposition of this tax depends on the ratio of the marginal product of waste water to the marginal product of machinery