question
If the market price of coffee is $5.00 per pound but the government will not allow coffee growers to grow more than $2.00 per pound of coffee, which of the following will happen?
answer
There will be a shortage of coffee
question
John is ready to pay $6 for an extra shoe. Due to an ongoing discount in the store, he gets a loaf for 4$, John's consumer surplus from the purchase is?
answer
$2
question
Which of the following can a firm do in the long run but not in the short run?
answer
Decrease the size of its physical plant
question
When is the average product of labor at its maximum
answer
When the average product of labor equals the marginal product of labor
question
If production displays diseconomies of scale, the long-run average cost curve is?
answer
upward sloping
question
The difference between the market demand curve for a perfectly competitive industry and the demand curve for a firm in this industry?
answer
The market demand curve is downward sloping; the firms demand curve is a horizontal line
question
what order do you label the graph
answer
Mc, ATC, AVC
question
price ceiling
answer
a legal maximum on the price at which a good can be sold
question
price floor
answer
a legal minimum on the price at which a good can be sold
question
consumer surplus
answer
the difference between the amount a buyer is willing to pay for a good and the amount the buyer actually pays
question
consumer surplus equation
answer
1/2 (base)(height)
question
producer surplus
answer
the difference between the amount a seller is paid for a good and the minimum price required by the seller
question
total surplus equation
answer
CS+PS
question
efficient
answer
an allocation of resources that maximizes the total surplus
question
firms objective
answer
maximize profits
question
explicit costs
answer
salaries, rent, utilities, interest
question
implicit cost
answer
a firms opportunity cost of production
question
total cost
answer
explicit costs+ implicit costs
question
economic profit
answer
total revenue-total cost of production
question
accounting profit
answer
total revenue-explicit costs
question
sunk costs
answer
costs that have already been incurred in the past and cannot be recovered
question
short run
answer
a period in which some of the inputs of the firm are fixed
question
long run
answer
a period in which all the inputs of the firm are variable
question
total product
answer
the total quantity of a good produced
question
marginal product of labor
answer
the change in firm's output when an additional worker is hired
question
marginal product of labor equation
answer
MP= ^Q/^L
question
average product
answer
the output per worker
question
average product equation
answer
AP=QL
question
variable cost
answer
the cost of the firms variable inputs
question
fixed cost
answer
the cost of the firms fixed inputs
question
average variable cost equation
answer
AFC=VC/Q
question
average fixed cost equation
answer
AFC=FC/Q
question
average total cost equation
answer
ATC=AVC+AFC
question
marginal cost equation
answer
MC=^TC/^Q or MC=^VC/^Q
question
long run average cost curve
answer
shows the lowest unit cost at which the firm can produce any given level of output
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