Mankiw Chapter 13 Principles of Economics

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Posted on

March 14th, 2023

question

Total revenue

answer

The amount a firm receives for the sale of its output

question

Total cost

answer

The market value of the inputs a firm used in production

question

Profit equation

answer

Total revenue-Total cost
(TR-TC)

question

Explicit costs

answer

Input costs that require outlay of money from a firm (ex. Paying a worker)

question

Implicit costs

answer

Input costs that don't require money from the firm (ex. The owner's time)

question

Economic profit

answer

TR-TC, including explicit and implicit costs

question

Accounting profit

answer

TR-Explicit Costs (does not include the implicit costs)

question

Production function

answer

The relationship between the quantity of inputs used to make a good and the quantity of outputs of that good

question

Marginal product

answer

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

question

Diminishing marginal product

answer

The property whereby the marginal product of an input declines as the quantity of the input increases

question

Fixed costs

answer

Costs that stay the same (hence fixed)

question

Variable costs

answer

Costs that vary with the quantity of output produced

question

Average total cost (ATC)

answer

Total cost/Quantity (TC/Q)

question

Average fixed cost (AFC)

answer

Fixed cost/quantity (FC/Q)

question

Average Variable Cost (AVC)

answer

Variable cost/quantity (VC/Q)

question

Marginal cost

answer

Change in TC/Change in Quantity

question

Economies of scale

answer

When the LONG RUN average total cost falls as the quantity increases (where the curve declines on an ATC curve)

question

Diseconomies of scale

answer

When the LONG RUN ATC rises as quantity increases (when the curve inclines on an ATC curve)

question

Constant return to scale

answer

When the LONG RUN ATC stays constant and the quantity changes (when the curve stays the same)

question

What is the goal of a firm?

answer

To maximize their profits

question

Total revenue

answer

Price times quantity

question

On an average cost curve,

answer

The ATC is above the AVC

question

The marginal cost curve intersects the

answer

ATC and AVC at their minimums

question

When the ATC and AVC are increasing,

answer

The marginal cost curve is above them

question

When the ATC and AVC are decreasing,

answer

The marginal cost curve is below them

question

If a firm produces, it should produce at the output level where

answer

The marginal revenue is equal to marginal cost

question

When prices constant it is always equal to the

answer

Marginal revenue and average revenue

question

In the short run, a firm should produce if

answer

The price of its product is above the AVC of production

question

When should firms shut down?

answer

When the price goes below the AVC curve

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question

Total revenue

answer

The amount a firm receives for the sale of its output

question

Total cost

answer

The market value of the inputs a firm used in production

question

Profit equation

answer

Total revenue-Total cost
(TR-TC)

question

Explicit costs

answer

Input costs that require outlay of money from a firm (ex. Paying a worker)

question

Implicit costs

answer

Input costs that don't require money from the firm (ex. The owner's time)

question

Economic profit

answer

TR-TC, including explicit and implicit costs

question

Accounting profit

answer

TR-Explicit Costs (does not include the implicit costs)

question

Production function

answer

The relationship between the quantity of inputs used to make a good and the quantity of outputs of that good

question

Marginal product

answer

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

question

Diminishing marginal product

answer

The property whereby the marginal product of an input declines as the quantity of the input increases

question

Fixed costs

answer

Costs that stay the same (hence fixed)

question

Variable costs

answer

Costs that vary with the quantity of output produced

question

Average total cost (ATC)

answer

Total cost/Quantity (TC/Q)

question

Average fixed cost (AFC)

answer

Fixed cost/quantity (FC/Q)

question

Average Variable Cost (AVC)

answer

Variable cost/quantity (VC/Q)

question

Marginal cost

answer

Change in TC/Change in Quantity

question

Economies of scale

answer

When the LONG RUN average total cost falls as the quantity increases (where the curve declines on an ATC curve)

question

Diseconomies of scale

answer

When the LONG RUN ATC rises as quantity increases (when the curve inclines on an ATC curve)

question

Constant return to scale

answer

When the LONG RUN ATC stays constant and the quantity changes (when the curve stays the same)

question

What is the goal of a firm?

answer

To maximize their profits

question

Total revenue

answer

Price times quantity

question

On an average cost curve,

answer

The ATC is above the AVC

question

The marginal cost curve intersects the

answer

ATC and AVC at their minimums

question

When the ATC and AVC are increasing,

answer

The marginal cost curve is above them

question

When the ATC and AVC are decreasing,

answer

The marginal cost curve is below them

question

If a firm produces, it should produce at the output level where

answer

The marginal revenue is equal to marginal cost

question

When prices constant it is always equal to the

answer

Marginal revenue and average revenue

question

In the short run, a firm should produce if

answer

The price of its product is above the AVC of production

question

When should firms shut down?

answer

When the price goes below the AVC curve

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