Microeconomics Ch. 11 Review

The basic activity of a firm is to use inputs to produce___?

What are 3 examples of firm inputs used to produce outputs?

if a firm improves its ability to turn inputs into outputs, we refer to this as___?

: A change in the ability of a firm to produce a given level of output with a given quantity of inputs.

The processes a firm uses to turn inputs into outputs of goods and services.

Give an example of one of Walmart's important inputs:

a period of time during which at least one of a firm's inputs is fixed.

no inputs are fixed, the firm can adopt new technology, and increase or decrease the size of its physical plant

are costs that change as output changes

are costs that remain constant as output changes

In the long run all fixed cost's are___? Because___?

Total cost = ___ + ___?

An academic book publisher turns its inputs into its ___?
Name some of the inputs and what the output would be___?

A cost that involves spending money

A non-monetary opportunity cost

Jill Johnson's restaurant turns its inputs (pizza ovens, ingredients, labor, electricity, etc.) into pizzas for sale.
To make analysis simple, let's consider only two inputs:
1.The pizza ovens
2. Workers
In the short run what is the fixed cost? variable?
If Jill has 2 pizza ovens each $400 what is the cost?(variable or fixed?)
If Jill has 4 workers each worth $600 each what is the cost? (variable or fixed?)
Jill's costs are not 0, even if quantity of output is 0. Why?

A Table or graph showing the relationship between the inputs employed and the maximum output of the firm.

Total cost increases as ___ increases?

Average Total Cost on a graph has what shape?

How do you calculate Average total cost?

For low levels of production, the average cost falls as the number of pizzas ___; at higher levels, the average cost rises as the number of pizzas ___?

Most of the time you get a ___ shape for average total cost?

Specialization results from the ___?

The additional output a firm produces as a result of hiring one more worker.

at some point, adding more of a variable input to the same amount of a fixed input will cause the marginal product of the variable input to decline.

Additional workers add to the potential output, but not by as much. Eventually they start getting in each other's way, etc., because there is only a fixed number of pizza ovens, cash registers, what is this an example of?

The marginal product of labor rises initially because of the effects of ___ and ___, and then falls because of the effects of ___?

How is the average product of labor calculated?

With only two workers, the average product of labor was
450 / 2 = 225 (the first worker had an APL of 450)
So the third worker made the average product of labor go ___? Why did this happen?
If the next worker produces more (marginal) output than the average, then the average product will ___?

the change in a firm's total cost from producing one more unit of a good or service

How do you calculate Marginal Cost?

How do you calculate average fixed cost?

How do you calculate average variable cost?

When MC is below ATC, ATC is ____?

When MC is above ATC, ATC is ___?

MC, ATC, AVC graphs are all ___ shaped?

the marginal cost curve intersects both the:____ and ____?

the vertical sum of the AVC and AFC curves is the ___?

If the AFC gets smaller, the ATC and AVC curves ___?

In the long run, there is no distinction between ___?

____shows the lowest cost at which a firm is able to produce a given quantity of output in the long run, when no inputs are fixed.

the firm's long-run average costs falling as it increases the quantity of output it produces:

Here, a small car factory can produce at a ___ average cost than a large one, for small quantities?

For more ___, a larger factory is more efficient.

The lowest level of output at which all economies of scale are exhausted is known as the ___?

its long-run average cost remains unchanged as it increases output.

Eventually a firm might get large enough to experience___?

a situation in which a firm's long-run average costs rise as the firm increases output.

Production might increase at a greater-than-proportional rate as inputs increase.
Having more workers can allow specialization.
Large firms may be able to purchase inputs at lower prices.
All of these would lead to___? (scale)
Give an example

The Model A lost money for Ford, because the River Rouge complex was too large to allow efficient production, producing a disconnect between workers and management. This led to ___? (scale)

"Increasing average cost" can occur in the short-run as ___or in the long-run as ____? The reasons for the two are not the same.

What is the difference between calculating Marginal Cost and the Marginal product of labor?

The "long run" refers not to a specific period of time, but a conceptual period of time that is sufficiently long to allow all inputs to be ___?