microeconomics avc/atc/mc/productivity & cost measures

question

T/F: Decision making is forward thinking, therefore sunk costs are ignored

answer

True

question

actual money spent

answer

explicit cost

question

the money value of resources used and benefits forgone

answer

implicit cost

question

the additional cost of producing one more unit

answer

marginal cost

question

the extra benefit of adding one unit

answer

marginal benefit

question

the quantity that generates the maximum possible total net gain

answer

optimal quantity

question

T/F: Marginal analysis is used for "how much" questions

answer

true

question

an explicit accounting cost; a calculation expressed in $ of a machine's useful life consumed

answer

deprication

question

If a $3000 copier machine has a 3 year life span, how much is it worth after 1 year?

answer

2000; 1000 less

question

accounting profit=

answer

total revenue - explicit costs(+deprecation)

question

economic profit=

answer

total revenue - explicit costs - implicit costs; BUSINESS REVENUE minus the OPPORTUNITY COST of its resources

question

T/F: economic profit will never be larger than accounting profit

answer

true

question

earning 0 economic profit

answer

normal profit

question

the relationship between quantity of inputs used to make a good and the quantity of outputs it produces

answer

production function

question

an input whose quantity is fixed for a period of time and cannot be varied

answer

fixed input

question

an input whose quantity the firm can vary at any time

answer

variable input

question

time period during which all inputs become variable

answer

long run

question

time period during which at least one input is fixed

answer

short run

question

most common variable input

answer

labor

question

T/F: the slope of the total product curve is equal to the marginal product of the variable input

answer

true

question

MPl=

answer

change in total product/change in quantity (labor)

question

MP=

answer

change in Q/change in L; change in quantity of output/change in quantity of input

question

average product=

answer

total product/ quantity of labor

question

additional quantity of output produced using one more unit of the variable input, usually labor

answer

marginal product (MP or MPP)

question

Wendy sells ice-making machines. She can sell 6 per week at a price of $2,000. If she charges $2,100, she will only sell 5 per week. The marginal benefit of selling the 6th ice-making machine is:

answer

1,500

question

The ________ is the increase in output obtained by hiring an additional worker.

answer

marginal product

question

Diminishing marginal returns means that:

answer

each additional unit of an input used will increase output, but by smaller and smaller amounts

question

The marginal cost curve is the mirror image of the

answer

marginal product curve

question

When marginal cost is rising:

answer

both average variable cost and average total cost may be rising or falling

question

Suppose Cyd knows the average cost of producing 9 scones is $5, while the average cost of producing 10 scones is $5.20. What is the marginal cost of the 10th unit?

answer

question

The average total cost curve in the short run slopes upward due to:

answer

diminishing returns

question

The curve that shows the additional cost of each additional unit of output is called the:

answer

marginal cost curve

question

If a firm produces 10 units of output and incurs $35 in average total cost, and $5 in average fixed cost, average variable cost is:

answer

question

T/F: The average fixed cost curve is downward-sloping and approaches the horizontal axis

answer

true

question

T/F: When the marginal product of labor is upward-sloping, the marginal cost curve is upward-sloping

answer

false

question

When a firm produces a small amount of output, the spreading effect:

answer

is stronger than the diminishing returns effect

question

After three years at an expensive college, Pierre realizes that he doesn't want to finish school but really wants to be a chef. When Pierre suggests that he leave the college for culinary school, his parents insist that he stay for one more year to get his degree. Are his parents correct?

answer

no, Pierre's parents are wrong: the marginal benefit to Pierre of another year of college is less than the marginal cost of college

question

The long-run average cost curve will be upward sloping when the firm is experiencing:

answer

diseconomies of scale

question

A university that benefits from lower costs per unit as it grows is an example of:

answer

economies of scale

question

When diseconomies of scale outweigh economies of scale, the:

answer

long-run average cost curve rises

question

If your firm is operating in the negatively sloped portion of a long-run average total cost curve, then your production exhibits:

answer

increasing returns to scale

1 of 41

question

T/F: Decision making is forward thinking, therefore sunk costs are ignored

answer

True

question

actual money spent

answer

explicit cost

question

the money value of resources used and benefits forgone

answer

implicit cost

question

the additional cost of producing one more unit

answer

marginal cost

question

the extra benefit of adding one unit

answer

marginal benefit

question

the quantity that generates the maximum possible total net gain

answer

optimal quantity

question

T/F: Marginal analysis is used for "how much" questions

answer

true

question

an explicit accounting cost; a calculation expressed in $ of a machine's useful life consumed

answer

deprication

question

If a $3000 copier machine has a 3 year life span, how much is it worth after 1 year?

answer

2000; 1000 less

question

accounting profit=

answer

total revenue - explicit costs(+deprecation)

question

economic profit=

answer

total revenue - explicit costs - implicit costs; BUSINESS REVENUE minus the OPPORTUNITY COST of its resources

question

T/F: economic profit will never be larger than accounting profit

answer

true

question

earning 0 economic profit

answer

normal profit

question

the relationship between quantity of inputs used to make a good and the quantity of outputs it produces

answer

production function

question

an input whose quantity is fixed for a period of time and cannot be varied

answer

fixed input

question

an input whose quantity the firm can vary at any time

answer

variable input

question

time period during which all inputs become variable

answer

long run

question

time period during which at least one input is fixed

answer

short run

question

most common variable input

answer

labor

question

T/F: the slope of the total product curve is equal to the marginal product of the variable input

answer

true

question

MPl=

answer

change in total product/change in quantity (labor)

question

MP=

answer

change in Q/change in L; change in quantity of output/change in quantity of input

question

average product=

answer

total product/ quantity of labor

question

additional quantity of output produced using one more unit of the variable input, usually labor

answer

marginal product (MP or MPP)

question

Wendy sells ice-making machines. She can sell 6 per week at a price of $2,000. If she charges $2,100, she will only sell 5 per week. The marginal benefit of selling the 6th ice-making machine is:

answer

1,500

question

The ________ is the increase in output obtained by hiring an additional worker.

answer

marginal product

question

Diminishing marginal returns means that:

answer

each additional unit of an input used will increase output, but by smaller and smaller amounts

question

The marginal cost curve is the mirror image of the

answer

marginal product curve

question

When marginal cost is rising:

answer

both average variable cost and average total cost may be rising or falling

question

Suppose Cyd knows the average cost of producing 9 scones is $5, while the average cost of producing 10 scones is $5.20. What is the marginal cost of the 10th unit?

answer

question

The average total cost curve in the short run slopes upward due to:

answer

diminishing returns

question

The curve that shows the additional cost of each additional unit of output is called the:

answer

marginal cost curve

question

If a firm produces 10 units of output and incurs $35 in average total cost, and $5 in average fixed cost, average variable cost is:

answer

question

T/F: The average fixed cost curve is downward-sloping and approaches the horizontal axis

answer

true

question

T/F: When the marginal product of labor is upward-sloping, the marginal cost curve is upward-sloping

answer

false

question

When a firm produces a small amount of output, the spreading effect:

answer

is stronger than the diminishing returns effect

question

answer

no, Pierre's parents are wrong: the marginal benefit to Pierre of another year of college is less than the marginal cost of college

question

The long-run average cost curve will be upward sloping when the firm is experiencing:

answer

diseconomies of scale

question

A university that benefits from lower costs per unit as it grows is an example of:

answer

economies of scale

question

When diseconomies of scale outweigh economies of scale, the:

answer

long-run average cost curve rises

question

If your firm is operating in the negatively sloped portion of a long-run average total cost curve, then your production exhibits:

answer

increasing returns to scale

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