econ 3.1-3.3 - Assignment Essays

question

production function

answer

the way a firm combines inputs to make an output

question

variable input

answer

can be changed in the short run to change production

question

fixed input

answer

can't be changed in the short run to change production

question

short run

answer

period of time that has fixed inputs, too short to alter plant capacity

question

long run

answer

period of time long enough for all inputs to be changes and to alter plant capacity

question

plant capacity

answer

a firms max potential level of production

question

total product

answer

total output quantity from a certain amount of inputs

question

marginal product

answer

additional output produced by one more unit of a variable input
(change in TP) / (change in input)

question

average product

answer

average output quantity produced by one unit of a variable input
(TP) / (input)

question

specialization

answer

division of labor
causes initial increase in marginal product

question

diminishing returns

answer

more variable inputs are being added to a fixed amounts of fixed inputs
causes decrease in marginal product

question

efficiency

answer

the relationship between inputs and outputs

question

fixed cost

answer

cost is the same at all output levels

question

variable cost

answer

cost changes as output changes

question

total cost

answer

sum of variable cost and fixed cost

question

marginal cost

answer

additional cost of one more unit of output
depends on marginal product; decreases initially and then rises
(change in total cost) / (change in quantity)

question

average fixed cost

answer

(fixed cost) / (quantity)

question

average variable cost

answer

(variable cost) / (quantity)

question

average total cost

answer

(total cost) / (quantity) or AFC + AVC

question

short run production cost curve patterns

answer

marginal cost decreases then increases
average fixed cost always decreases
average variable cost and average total cost decrease then increase, u shaped, get closer

question

spreading effect

answer

average total cost falls as fixed cost is spread over a higher output quantity and then rises when diminishing returns outweigh

question

increasing returns to scale

answer

output increases faster than input rate

question

decreasing returns to scale

answer

output increases slower than input rate

question

constant returns to scale

answer

output increases at input rate

question

economies of scale

answer

LRATC decreases as output increases

question

diseconomies of scale

answer

LRATC increases as output decreases

question

minimum efficient scale

answer

helps determine the number of firms in a market

question

long run average total cost curve graph patterns

answer

economies of scale shown to the left of LRATC minimum
diseconomies of scale shown to the right of LRATC minimum

question

when is a scale efficient (LRATC)

answer

when there are constant returns to scale

1 of 29

question

production function

answer

the way a firm combines inputs to make an output

question

variable input

answer

can be changed in the short run to change production

question

fixed input

answer

can't be changed in the short run to change production

question

short run

answer

period of time that has fixed inputs, too short to alter plant capacity

question

long run

answer

period of time long enough for all inputs to be changes and to alter plant capacity

question

plant capacity

answer

a firms max potential level of production

question

total product

answer

total output quantity from a certain amount of inputs

question

marginal product

answer

additional output produced by one more unit of a variable input
(change in TP) / (change in input)

question

average product

answer

average output quantity produced by one unit of a variable input
(TP) / (input)

question

specialization

answer

division of labor
causes initial increase in marginal product

question

diminishing returns

answer

more variable inputs are being added to a fixed amounts of fixed inputs
causes decrease in marginal product

question

efficiency

answer

the relationship between inputs and outputs

question

fixed cost

answer

cost is the same at all output levels

question

variable cost

answer

cost changes as output changes

question

total cost

answer

sum of variable cost and fixed cost

question

marginal cost

answer

additional cost of one more unit of output
depends on marginal product; decreases initially and then rises
(change in total cost) / (change in quantity)

question

average fixed cost

answer

(fixed cost) / (quantity)

question

average variable cost

answer

(variable cost) / (quantity)

question

average total cost

answer

(total cost) / (quantity) or AFC + AVC

question

short run production cost curve patterns

answer

marginal cost decreases then increases
average fixed cost always decreases
average variable cost and average total cost decrease then increase, u shaped, get closer

question

spreading effect

answer

average total cost falls as fixed cost is spread over a higher output quantity and then rises when diminishing returns outweigh

question

increasing returns to scale

answer

output increases faster than input rate

question

decreasing returns to scale

answer

output increases slower than input rate

question

constant returns to scale

answer

output increases at input rate

question

economies of scale

answer

LRATC decreases as output increases

question

diseconomies of scale

answer

LRATC increases as output decreases

question

minimum efficient scale

answer

helps determine the number of firms in a market

question

long run average total cost curve graph patterns

answer

economies of scale shown to the left of LRATC minimum
diseconomies of scale shown to the right of LRATC minimum

question

when is a scale efficient (LRATC)

answer

when there are constant returns to scale

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