question
Fixed Costs
answer
Don't depend on quantity
question
Variable Costs
answer
depend on quantity
question
Accounting profit
answer
TR-TC, disregards opportunity cost
question
Economic profit
answer
TR-TC-OC
question
Economies of Scale
answer
Long run average total costs falls as output increases
question
Marginal Cost
answer
how much it costs to produce one additional unit
question
Sunk Cost
answer
not recoverable money
question
In terms of cost, what is the difference between short and long run?
answer
In long run, the costs are all variable. In the short run, there are variable and fixed costs.
question
Where does the marginal cost curve pass through the ATC curve?
answer
At its lowest point
question
Why does the distance between ATC and AVC get smaller as output increases?
answer
As output increases, the fixed costs become lower in comparison to the variable costs
question
If a firm chooses to produce zero units of output, what are its costs?
answer
Fixed costs
question
If the cost of producing 10 units is $450 and the cost of producing 11 units is $495, what is the marginal cost of producing the 11th unit?
answer
$45
question
In a competitive industry, what are the long-run economic profits?
answer
0
question
When will new firms enter a competitive market?
answer
when the firms have profits
question
How do firms exiting a market affect an existing firm's price?
answer
Price goes up
question
What does the demand curve of a firm in a competitive market look like?
answer
MRDARP, perfectly elastic
question
When should a competitive firm shut down?
answer
P<AVC
question
When should a competitive firm exit?
answer
P<ATC
question
At what point does a firm maximize profit>
answer
MR=MC
question
If market demand decreases, what happens to the profit maximizing output of a firm?
answer
Lower
question
Suppose a plumber has total revenue of $125,000 and total costs of $100,000 for the year. Suppose the plumber left a teaching job paying $60,000 to start his business. What are his accounting profits? Economic profits?
answer
$25,000; -$35,000
question
What are three things that are equal when a competitive firm is in long run equilibrium?
answer
P=MR=AR
question
Name three characteristics of a competitive firm?
answer
Large # of buyers and sellers, sell identical products, east to enter and exit
question
Pizzeria pays workers $1000 per week. 6 workers produce 1500 pizzas and 7 workers produce 1800 pizzas. Marginal product of 7th worker?
answer
300
question
In a competitive firm, what does price equal?
answer
marginal revenue, demand, and average revenue
question
A competitive firm is a price
answer
taker
question
Why does MC initially go down
answer
increasing returns
question
Why does MC eventually go up
answer
diminishing returns
question
When a firm doubles the amount of output
answer
total revenue doubles
question
what costs does a firm pay when it exits the market
answer
neither variable nor fixed
question
In setting production level
answer
firm's cost curves by themselves do not tell us what decisions the firm will make
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
