question
Define Technological change
answer
A change in the ability of a firm to produce a given level of output with a given quantity of inputs.
question
Short run
answer
The period of time during which at least one of a firm's inputs is fixed.
question
Long run
answer
The period of time in which a firm can vary all its inputs, adopt new technology and increase or decrease the size of its physical plant.
question
Total Cost
answer
The cost of all the inputs a firm uses in production.
question
Variable cost
answer
Costs that change as output changes.
question
Fixed cost
answer
Costs that remain constant as output changes.
question
What is the formula for Total Cost?
answer
TC = FC + VC (divide everything by Q to get averages)
question
What is the formula for Average Total Cost in terms of the other averages?
answer
ATC = AFC + AVC
question
Production function
answer
The relationship between the inputs employed by a firm and the maximum output it can produce with those inputs.
question
Marginal product of labor
answer
Additional output a firm produces as a result of hiring one more worker.
question
Law of diminishing returns
answer
The principle that, at some point, adding more of a variable input, such as labor, to the same amount of a fixed input, such as capital, will cause the marginal product of the variable input to decline.
question
Average product of labor
answer
The total output produced by a firm divided by the quantity of workers.
question
Marginal cost
answer
the change in a firm's total cost from producing one more unit of a good or service. (Whenever it is "marginal", you have to say "one more unit" as we are looking at the margin)
question
Average fixed cost
answer
Fixed cost divided by the quantity of output produced.
question
Average variable cost
answer
Variable cost divided by the quantity of output produced.
question
Constant returns to scale
answer
The situation in which a firm's long -run average costs remain unchanged as it increases output.
question
Diseconomies of scale
answer
The situation in which a firm's long-run average costs rise as the firm increases output.
question
Minimum efficient scale
answer
The level of output at which all economies of scale are exhausted.
question
How do you calculate ATC in terms of TC?
answer
TC/Q
question
Wherever Average Fixed Cost and Average Variable Cost intersect, what does it have to align with?
answer
Minimum of the ATC curve
question
Draw production function (short run)
answer
Draw new graph below, X values are the same, Y values = above X value divided by above Y (Fixed Cost divided by Quantity)
question
Draw Marginal Product (of labor) curve
answer
Draw new graph below, X values are the same, Y values = above X value divided by above Y (Variable Cost divided by quantity)
question
Draw a curve representing labor and quantity
answer
Draw new graph below, X values are the same, Y values = above X value divided by above Y (Total Cost divided by quantity)
question
Draw a variable cost curve
answer
ATC regular, ATC in economies of scale graph, or ATC combined with Marginal Cost, LAC
question
Draw Variable cost and Fixed cost overlaid on top of one another
answer
Capital = fixed inputs, symbol K
question
Draw Variable Cost, Fixed Cost and TC overlaid on top of one another
answer
Labor refers to variable inputs, symbol L
question
How do you derive Average Fixed Cost graph from Fixed Cost graph?
answer
Marginal Cost and ATC
question
How do you derive Average Variable Cost graph from Variable Cost graph?
answer
undefined
question
How do you derive Average Total graph from Total Cost graph?
answer
undefined
question
Draw Total Cost (with the rays necessary for Average Total Cost), Fixed Cost, and Variable Cost all on the same graph
answer
undefined
question
Draw ATC, AFC and AVC all on the same graph
answer
undefined
question
QMES is for what graph?
answer
undefined
question
What does Capital refer to? What is its symbol
answer
undefined
question
What does Labor refer to? What is its symbol
answer
undefined
question
At QMES, what two values are equal?
answer
undefined
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
