Econ 201 - Chapter 7 - Assignment Essays

question

Firm (or producer or business)

answer

an organization that combines inputs of labor, capital, land, and raw or finished component materials to produce outputs.

question

Private enterprise

answer

the ownership of businesses by private individuals.

question

Production

answer

the process of combining inputs to produce outputs, ideally of a value greater than the value of the inputs.

question

Accounting Profit

answer

the difference between dollars brought in and dollar paid out.

question

Economic Profit

answer

includes both explicit and implicit costs

question

Fixed Inputs

answer

factors of production that can't be easily increased or decreased in a short period of time.

question

Variable inputs

answer

factors of production that a firm can easily increase or decrease in a short period of time.

question

Short Run

answer

period of time during which at least some factors of production are fixed.

question

Long Run

answer

period of time during which all factors are variable.

question

Marginal Product (MP)

answer

the additional output of one more worker; mathematically, MP = ΔTP / ΔL

question

Law of Diminishing Marginal Productivity

answer

general rule that as a firm employs more labor, eventually they become less productive.

question

Variable costs

answer

cost of production that increases with the quantity produced; costs of variable inputs, like labor.

question

Fixed Costs

answer

costs of the fixed inputs, like rent.

question

Total Costs

answer

the sum of fixed and variable costs of production.

question

Marginal Cost

answer

the additional cost of producing one more unit of output; mathematically, MC = ΔTC / ΔL

question

Average Profit

answer

profit divided by the quantity of output produced; also know as profit margin

question

Average Total Cost

answer

total cost divided by the quantity of output

question

Average Variable cost

answer

variable cost divided by the quantity of output

question

constant returns to scale

answer

expanding all inputs proportionately does not change the average cost of production

question

diseconomies of scale

answer

the long-run average cost of producing output increases as total output increases

question

economies of scale

answer

the long-run average cost of producing output decreases as total output increases

question

explicit costs

answer

out-of-pocket costs for a firm, for example, payments for wages and salaries, rent, or materials

question

Factors of production

answer

(or inputs) resources that firms use to produce their products, for example, labor and capital

question

implicit costs

answer

the opportunity cost of resources already owned by the firm and used in business, for example, expanding a factory onto land already owned

question

long run

answer

period of time during which all of a firm's inputs are variable

question

short run

answer

period of time during which at least one or more of the firm's inputs is fixed

question

long-run average cost (LRAC) curve

answer

shows the lowest possible average cost of production, allowing all the inputs to production to vary so that the firm is choosing its production technology

question

short-run average cost (SRAC) curve

answer

the average total cost curve in the short term; shows the total of the average fixed costs and the average variable costs

question

production function

answer

mathematical equation that tells how much output a firm can produce with given amounts of the inputs

question

production technologies

answer

alternative methods of combining inputs to produce output

question

revenue

answer

income from selling a firm's product; defined as price times quantity sold

question

Total product

answer

synonym for a firm's output

question

Perfect Competition

answer

Many firms with identical products

question

Monopolistic Competition

answer

Many firms with similar but not identical products

question

Oligopoly

answer

Few firms with identical or similar products

question

Monopoly

answer

One firm with no similar products

1 of 36

question

Firm (or producer or business)

answer

an organization that combines inputs of labor, capital, land, and raw or finished component materials to produce outputs.

question

Private enterprise

answer

the ownership of businesses by private individuals.

question

Production

answer

the process of combining inputs to produce outputs, ideally of a value greater than the value of the inputs.

question

Accounting Profit

answer

the difference between dollars brought in and dollar paid out.

question

Economic Profit

answer

includes both explicit and implicit costs

question

Fixed Inputs

answer

factors of production that can't be easily increased or decreased in a short period of time.

question

Variable inputs

answer

factors of production that a firm can easily increase or decrease in a short period of time.

question

Short Run

answer

period of time during which at least some factors of production are fixed.

question

Long Run

answer

period of time during which all factors are variable.

question

Marginal Product (MP)

answer

the additional output of one more worker; mathematically, MP = ΔTP / ΔL

question

Law of Diminishing Marginal Productivity

answer

general rule that as a firm employs more labor, eventually they become less productive.

question

Variable costs

answer

cost of production that increases with the quantity produced; costs of variable inputs, like labor.

question

Fixed Costs

answer

costs of the fixed inputs, like rent.

question

Total Costs

answer

the sum of fixed and variable costs of production.

question

Marginal Cost

answer

the additional cost of producing one more unit of output; mathematically, MC = ΔTC / ΔL

question

Average Profit

answer

profit divided by the quantity of output produced; also know as profit margin

question

Average Total Cost

answer

total cost divided by the quantity of output

question

Average Variable cost

answer

variable cost divided by the quantity of output

question

constant returns to scale

answer

expanding all inputs proportionately does not change the average cost of production

question

diseconomies of scale

answer

the long-run average cost of producing output increases as total output increases

question

economies of scale

answer

the long-run average cost of producing output decreases as total output increases

question

explicit costs

answer

out-of-pocket costs for a firm, for example, payments for wages and salaries, rent, or materials

question

Factors of production

answer

(or inputs) resources that firms use to produce their products, for example, labor and capital

question

implicit costs

answer

the opportunity cost of resources already owned by the firm and used in business, for example, expanding a factory onto land already owned

question

long run

answer

period of time during which all of a firm's inputs are variable

question

short run

answer

period of time during which at least one or more of the firm's inputs is fixed

question

long-run average cost (LRAC) curve

answer

shows the lowest possible average cost of production, allowing all the inputs to production to vary so that the firm is choosing its production technology

question

short-run average cost (SRAC) curve

answer

the average total cost curve in the short term; shows the total of the average fixed costs and the average variable costs

question

production function

answer

mathematical equation that tells how much output a firm can produce with given amounts of the inputs

question

production technologies

answer

alternative methods of combining inputs to produce output

question

revenue

answer

income from selling a firm's product; defined as price times quantity sold

question

Total product

answer

synonym for a firm's output

question

Perfect Competition

answer

Many firms with identical products

question

Monopolistic Competition

answer

Many firms with similar but not identical products

question

Oligopoly

answer

Few firms with identical or similar products

question

Monopoly

answer

One firm with no similar products

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Econ 201 – Chapter 7

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