Economics Chapter 8 Business Costs and Production

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Posted on

March 14th, 2023

question

Profits and losses

answer

are determined by calculating the difference between expenses and revenues

question

Total revenue

answer

The amount of money received by firms when they sell a good or service. TR = P x Q.

question

Total Cost

answer

The amount a firm spends in order to produce the goods and services it produces

question

Explicit costs

answer

Costs that require an outlay of money by the firm

question

Implicit costs

answer

Opportunity costs supplied by owners

question

Accounting profit

answer

total revenue minus explicit costs

question

Economic profit

answer

A firm's revenues minus all of its implicit and explicit costs.

question

Output

answer

The production the firm creates

question

Factors of production

answer

Land, labor, and capital; the three groups of resources that are used to make all goods and services

question

Production function

answer

the relationship between the quantity of inputs a firm uses and the quantity of output it produces

question

Marginal product

answer

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

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Diminishing marginal product

answer

Occurs when successive increases in inputs are associated with a slower rise in output

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Variable costs

answer

Costs that change as output changes

question

Fixed costs

answer

Costs that do not vary with the level of output

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Average variable cost (AVC)

answer

Total variable cost divided by the quantity produced in a given time period

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Average fixed cost (AFC)

answer

Total fixed cost divided by the quantity of output produced.

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Average total cost (ATC)

answer

Sum of average variable cost and average fixed cost

question

Marginal cost

answer

The extra or additional cost of producing one more unit of output.

question

Efficient scale

answer

The output level that minimizes the average total cost

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Scale

answer

The size of the production process

question

Economies of scale

answer

Factors that cause a producer's average cost per unit to fall as output rises

question

Dis-economies of scale

answer

The factors that lead to an increase in average costs as a business grows beyond a certain size.

question

Constant returns to scales

answer

The factors that cause costs to remain constant as output expands in the long run

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question

Profits and losses

answer

are determined by calculating the difference between expenses and revenues

question

Total revenue

answer

The amount of money received by firms when they sell a good or service. TR = P x Q.

question

Total Cost

answer

The amount a firm spends in order to produce the goods and services it produces

question

Explicit costs

answer

Costs that require an outlay of money by the firm

question

Implicit costs

answer

Opportunity costs supplied by owners

question

Accounting profit

answer

total revenue minus explicit costs

question

Economic profit

answer

A firm's revenues minus all of its implicit and explicit costs.

question

Output

answer

The production the firm creates

question

Factors of production

answer

Land, labor, and capital; the three groups of resources that are used to make all goods and services

question

Production function

answer

the relationship between the quantity of inputs a firm uses and the quantity of output it produces

question

Marginal product

answer

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

question

Diminishing marginal product

answer

Occurs when successive increases in inputs are associated with a slower rise in output

question

Variable costs

answer

Costs that change as output changes

question

Fixed costs

answer

Costs that do not vary with the level of output

question

Average variable cost (AVC)

answer

Total variable cost divided by the quantity produced in a given time period

question

Average fixed cost (AFC)

answer

Total fixed cost divided by the quantity of output produced.

question

Average total cost (ATC)

answer

Sum of average variable cost and average fixed cost

question

Marginal cost

answer

The extra or additional cost of producing one more unit of output.

question

Efficient scale

answer

The output level that minimizes the average total cost

question

Scale

answer

The size of the production process

question

Economies of scale

answer

Factors that cause a producer's average cost per unit to fall as output rises

question

Dis-economies of scale

answer

The factors that lead to an increase in average costs as a business grows beyond a certain size.

question

Constant returns to scales

answer

The factors that cause costs to remain constant as output expands in the long run

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