chapter 12 micro Econ - Assignment Essays

question

total revenue

answer

Price x Quantity

question

total cost

answer

fixed costs plus variable costs

question

profit

answer

total revenue minus total cost

question

Fixed Cost (FC)

answer

the sum of the expenses of the firm that are stable and do not change with the quantity of a product that is produced and sold

question

Examples of fixed costs

answer

-rent
-insurance on buildings
-interest payments on borrowed capital
-fire insurance

question

variable costs

answer

costs that vary with the quantity of output produced

question

Examples of variable costs

answer

-salary payments
-energy, utilities
-raw materials
-insurance on merchandise and employees

question

explicit costs

answer

input costs that require an outlay of money by the firm (fixed and variable costs)

question

implicit costs

answer

Indirect, non-purchased, or opportunity costs of resources provided by the entrepreneur

question

example of explicit cost

answer

money wages, interest, rental payments

question

example of implicit cost

answer

the opportunity cost of the owner's time

question

economic profit

answer

total revenue - explicit costs - implicit costs

question

accounting profit

answer

total revenue minus total explicit cost

question

short run economics

answer

There are some variable inputs and at least one fixed input with a fixed plant size.

question

long run economics

answer

the period of time in which prices have fully adjusted to any economic changes. The long run is whenever all inputs become variable, firms adjust their plant size, and they have enough time to enter/exit the market.

question

marginal product

answer

the increase in output that arises from an additional unit of input

question

diminishing marginal product

answer

the marginal product of an input declines as the quantity of the input increases

question

total cost

answer

fixed costs plus variable costs

question

average cost

answer

the total cost divided by the quantity produced

question

marginal cost

answer

the cost of producing one more unit of a good

question

describe the cost curves

answer

MC: U shaped
ATC: U shaped, starts higher than MC, hits minimum when intersect with MC
AVC: U shaped, shorts lower than MC, hits minimum at intersection with MC
AFC: declines downwards because it is the same cost being spread out over more units, doesn't intersect with MC

question

Relate average product to average variable cost

answer

AVC and AP are inverses of each other; as AP reaches its maximum, AVC hits its minimum. This is because as your production increases on average, your overall variable costs are going to decrease (don't forget that variable costs are dependent upon the quantity of output produced)

question

Relate marginal product to marginal cost

answer

Marginal cost and marginal product are inversely related to one another: as one increases, the other will automatically decrease proportionally and vice versa.

question

Explain the difference between average and marginal costs.

answer

The average cost is the sum of the total cost of goods divided by the total number of goods whereas Marginal Cost increases in the cost of producing one more unit or additional unit of product or service.

question

compute Average fixed cost

answer

fixed cost / quantity

question

compute average variable costs

answer

variable costs / quantity

question

compute average total costs

answer

average fixed cost + average variable cost
OR
total cost / quantity

question

compute marginal cost

answer

change in total cost / change in quantity

question

compute average production

answer

total production / units of labor

question

compute marginal product

answer

change in total product / change in labor input

question

The Marginal cost curve is

answer

U-shaped and is the inverse of the marginal product curve

question

As marginal product of labor initially increases,

answer

the marginal cost decrease (remember, they are inverses!)

question

As marginal product decreases, marginal cost does what?

answer

marginal cost increases because marginal product and marginal cost are inverses of each other.

question

describe the relationship and the graphs of/between marginal and average cost curves

answer

when the marginal cost of producing another unit is less than the average total cost, producing an extra unit decreases the ATC, and vice versa

question

where does the MC curve intersect the ATC curve?

answer

at ATC's lowest point.

question

fixed costs (short run)

answer

cannot be adjusted

question

fixed costs in the long run

answer

are adjusted, thus no longer making them fixed

question

Returns to scale

answer

The rate by which output changes if the scale of all the factors of production is changed

question

minimum efficient scale

answer

The lowest rate of output at which a firm takes full advantage of economies of scale

question

economies of scale

answer

the reductions in average cost achieved by producing a large volume of a product

question

minimum efficient scale occurs at what output when in economies of scale?

answer

a very high level of output

question

natural monopoly

answer

a market that runs most efficiently when one large firm supplies all of the output

question

Examples of economies of scale

answer

Walmart, amazon; having a lot of storefronts, offering a wide variety of products at low prices

question

diseconomies of scale

answer

increases in cost per unit when output increases, or when operating efficiency decreases as businesses increase their scale

question

if increasing the scale of production to obtain a higher output raises the minimum of the average total cost, what occurs?

answer

diseconomies of scale; it is making the minimum average cost MORE EXPENSIVE!

question

In diseconomies of scale, minimum efficient scale occurs at what level of output?

answer

a very low level of output

question

if minimum efficient scale occurs at a low level of input, what does that say about the number of producers?

answer

There are lots of producers in a market.

question

constant returns to scale

answer

the situation in which a firm's long-run average costs remain unchanged as it increases output

question

when there is an extended range of constant returns to scale,

answer

relatively large AND small firms co-exist

question

the long run ATC curve

answer

made up of all the different short run ATC curves of various plant sizes

1 of 50

question

total revenue

answer

Price x Quantity

question

total cost

answer

fixed costs plus variable costs

question

profit

answer

total revenue minus total cost

question

Fixed Cost (FC)

answer

the sum of the expenses of the firm that are stable and do not change with the quantity of a product that is produced and sold

question

Examples of fixed costs

answer

-rent
-insurance on buildings
-interest payments on borrowed capital
-fire insurance

question

variable costs

answer

costs that vary with the quantity of output produced

question

Examples of variable costs

answer

-salary payments
-energy, utilities
-raw materials
-insurance on merchandise and employees

question

explicit costs

answer

input costs that require an outlay of money by the firm (fixed and variable costs)

question

implicit costs

answer

Indirect, non-purchased, or opportunity costs of resources provided by the entrepreneur

question

example of explicit cost

answer

money wages, interest, rental payments

question

example of implicit cost

answer

the opportunity cost of the owner's time

question

economic profit

answer

total revenue - explicit costs - implicit costs

question

accounting profit

answer

total revenue minus total explicit cost

question

short run economics

answer

There are some variable inputs and at least one fixed input with a fixed plant size.

question

long run economics

answer

question

marginal product

answer

the increase in output that arises from an additional unit of input

question

diminishing marginal product

answer

the marginal product of an input declines as the quantity of the input increases

question

total cost

answer

fixed costs plus variable costs

question

average cost

answer

the total cost divided by the quantity produced

question

marginal cost

answer

the cost of producing one more unit of a good

question

describe the cost curves

answer

question

Relate average product to average variable cost

answer

question

Relate marginal product to marginal cost

answer

Marginal cost and marginal product are inversely related to one another: as one increases, the other will automatically decrease proportionally and vice versa.

question

Explain the difference between average and marginal costs.

answer

question

compute Average fixed cost

answer

fixed cost / quantity

question

compute average variable costs

answer

variable costs / quantity

question

compute average total costs

answer

average fixed cost + average variable cost
OR
total cost / quantity

question

compute marginal cost

answer

change in total cost / change in quantity

question

compute average production

answer

total production / units of labor

question

compute marginal product

answer

change in total product / change in labor input

question

The Marginal cost curve is

answer

U-shaped and is the inverse of the marginal product curve

question

As marginal product of labor initially increases,

answer

the marginal cost decrease (remember, they are inverses!)

question

As marginal product decreases, marginal cost does what?

answer

marginal cost increases because marginal product and marginal cost are inverses of each other.

question

describe the relationship and the graphs of/between marginal and average cost curves

answer

when the marginal cost of producing another unit is less than the average total cost, producing an extra unit decreases the ATC, and vice versa

question

where does the MC curve intersect the ATC curve?

answer

at ATC's lowest point.

question

fixed costs (short run)

answer

cannot be adjusted

question

fixed costs in the long run

answer

are adjusted, thus no longer making them fixed

question

Returns to scale

answer

The rate by which output changes if the scale of all the factors of production is changed

question

minimum efficient scale

answer

The lowest rate of output at which a firm takes full advantage of economies of scale

question

economies of scale

answer

the reductions in average cost achieved by producing a large volume of a product

question

minimum efficient scale occurs at what output when in economies of scale?

answer

a very high level of output

question

natural monopoly

answer

a market that runs most efficiently when one large firm supplies all of the output

question

Examples of economies of scale

answer

Walmart, amazon; having a lot of storefronts, offering a wide variety of products at low prices

question

diseconomies of scale

answer

increases in cost per unit when output increases, or when operating efficiency decreases as businesses increase their scale

question

if increasing the scale of production to obtain a higher output raises the minimum of the average total cost, what occurs?

answer

diseconomies of scale; it is making the minimum average cost MORE EXPENSIVE!

question

In diseconomies of scale, minimum efficient scale occurs at what level of output?

answer

a very low level of output

question

if minimum efficient scale occurs at a low level of input, what does that say about the number of producers?

answer

There are lots of producers in a market.

question

constant returns to scale

answer

the situation in which a firm's long-run average costs remain unchanged as it increases output

question

when there is an extended range of constant returns to scale,

answer

relatively large AND small firms co-exist

question

the long run ATC curve

answer

made up of all the different short run ATC curves of various plant sizes

Order an Essay Now & Get These Features For Free:

Turnitin Report

Formatting

Title Page

Citation

Outline

Place an Order