micro chapter 9 review - Assignment Essays

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sunk cost

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past costs

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in constant return to scales...

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the long run average cost doesn't change

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economic costs equation

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explicit costs + implicit costs

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long run adjustments

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period long enough to adjust the quantities of all the resource that it employs

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total output equation

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total quantity / total product

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minimum efficient scale

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lowest level of output at which a firm can maximize long run average costs

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marginal product is the...

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output per unit of labor unit

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marginal product equation

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change in total product / change in labor input

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marginal cost equation

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change in total cost / change in quantity

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total cost equation

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total fixed cost + total variable cost

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total variable costs

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change with the level of output

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total variable costs examples

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payments for materials, fuel, power, transportation and labor

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diseconomies of scale

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difficulty of efficiently controlling/coordinating a firms operations

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economies of scale

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as size increases the # of factors will lead to decrease in average costs of production

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fixed costs

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do not vary with changes in output

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fixed costs still

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must be paid even if output is zero

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implicit costs

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opportunity costs

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"sunk cost fallacy"

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"get ones moneys worth"

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average total cost equation

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average fixed cost + average variable cost

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fixed cost examples

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rent payment, interest on firms debts, insurance premiums

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average variable cost equation

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total variable cost / quantity

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average fixed cost equation

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total fixed cost / quantity

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accounting profit equation

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total revenue - explicit costs

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accounting profit is...

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greater than economic profits and do not consider implicit costs

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economic profit equation

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total revenue - explicit costs - implicit costs

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if total product is increasing...

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marginal product is either increasing or decreasing

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average product is increasing then...

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average variable cost is decreasing

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average product is decreasing then...

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average variable cost is decreasing

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if one is producing no output then costs will be

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their fixed costs

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law of diminishing returns

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as a variable resource is added to a fixed resource, the marginal product of the variable resource will eventually decrease

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long run amount of calendar time

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varies from industry to industry

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when marginal product is increasing

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marginal cost is decreasing

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when marginal product is decreasing

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marginal cost is increasing

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marginal product of labor

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increase in output resulting from employing one more unit of labor

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as output increases the total variable cost

answer

increases at a decreasing rate and then at and increasing rate

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long run average total cost decreases as output increases due to

answer

economies of scale

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implicit costs are

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present but not obvious

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economic cost is a

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payment that must be made to obtain and retain services of a resource

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short run average variable costs are

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controlled and altered by changing production levels

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short run adjustment example

answer

hire extra workers or create more shifts

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long run adjustment example

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new production facility and more equipment

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normal profit

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typical "normal" amount of accounting profit that would likely been earned

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average product of labor equation

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total product / units of labor

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firms can't avoid paying

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fixed costs in the short run

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variable cost rises by

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increasing amount for each additional unit of output

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where marginal product exceeds average product

answer

average product rises

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when marginal product is less than average product

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average product declines

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where marginal product intersects average product

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average product is at maximum

1 of 48

question

sunk cost

answer

past costs

question

in constant return to scales...

answer

the long run average cost doesn't change

question

economic costs equation

answer

explicit costs + implicit costs

question

long run adjustments

answer

period long enough to adjust the quantities of all the resource that it employs

question

total output equation

answer

total quantity / total product

question

minimum efficient scale

answer

lowest level of output at which a firm can maximize long run average costs

question

marginal product is the...

answer

output per unit of labor unit

question

marginal product equation

answer

change in total product / change in labor input

question

marginal cost equation

answer

change in total cost / change in quantity

question

total cost equation

answer

total fixed cost + total variable cost

question

total variable costs

answer

change with the level of output

question

total variable costs examples

answer

payments for materials, fuel, power, transportation and labor

question

diseconomies of scale

answer

difficulty of efficiently controlling/coordinating a firms operations

question

economies of scale

answer

as size increases the # of factors will lead to decrease in average costs of production

question

fixed costs

answer

do not vary with changes in output

question

fixed costs still

answer

must be paid even if output is zero

question

implicit costs

answer

opportunity costs

question

"sunk cost fallacy"

answer

"get ones moneys worth"

question

average total cost equation

answer

average fixed cost + average variable cost

question

fixed cost examples

answer

rent payment, interest on firms debts, insurance premiums

question

average variable cost equation

answer

total variable cost / quantity

question

average fixed cost equation

answer

total fixed cost / quantity

question

accounting profit equation

answer

total revenue - explicit costs

question

accounting profit is...

answer

greater than economic profits and do not consider implicit costs

question

economic profit equation

answer

total revenue - explicit costs - implicit costs

question

if total product is increasing...

answer

marginal product is either increasing or decreasing

question

average product is increasing then...

answer

average variable cost is decreasing

question

average product is decreasing then...

answer

average variable cost is decreasing

question

if one is producing no output then costs will be

answer

their fixed costs

question

law of diminishing returns

answer

as a variable resource is added to a fixed resource, the marginal product of the variable resource will eventually decrease

question

long run amount of calendar time

answer

varies from industry to industry

question

when marginal product is increasing

answer

marginal cost is decreasing

question

when marginal product is decreasing

answer

marginal cost is increasing

question

marginal product of labor

answer

increase in output resulting from employing one more unit of labor

question

as output increases the total variable cost

answer

increases at a decreasing rate and then at and increasing rate

question

long run average total cost decreases as output increases due to

answer

economies of scale

question

implicit costs are

answer

present but not obvious

question

economic cost is a

answer

payment that must be made to obtain and retain services of a resource

question

short run average variable costs are

answer

controlled and altered by changing production levels

question

short run adjustment example

answer

hire extra workers or create more shifts

question

long run adjustment example

answer

new production facility and more equipment

question

normal profit

answer

typical "normal" amount of accounting profit that would likely been earned

question

average product of labor equation

answer

total product / units of labor

question

firms can't avoid paying

answer

fixed costs in the short run

question

variable cost rises by

answer

increasing amount for each additional unit of output

question

where marginal product exceeds average product

answer

average product rises

question

when marginal product is less than average product

answer

average product declines

question

where marginal product intersects average product

answer

average product is at maximum

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