Microeconomics Chapter 13 Questions

input costs that require an outlay of money (wages for workers, cost of materials)

input costs that do not require an outlay of money by the firm (time spent working)

total revenue minus explicit costs

total revenue minus total cost (explicit and implicit cost included)

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

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

change in output divided by change in input

the property whereby the marginal product of an input declines as the quantity of the input decreases

each additional unit of input decreases in usefulness (i.e. adding workers to a baker will be helpful up to a point but eventually there will be so many that they are getting into each others' way, so adding another worker is not as useful as it was previously)

add up the costs that will not vary with the quantity of output produced (i.e. rent, fixed salaries)

add up the costs that vary with the quantity of output produced (i.e. ingredients, workers with hourly wages)

add fixed costs and variable costs

fixed cost divided by quantity of output

variable cost divided by quantity of output

total cost divided by quantity of output

change in total cost divided by change in quantity of output

a downward sloping curve, decreases at a decreasing rate (slopes downward steeply then begins to level off)

upward sloping line

starts off as a downward sloping curve, hits a minims, the begins to increase slightly

upward sloping line, steeper that VC, points are plotted at halves (in between the units of output)

Whenever marginal cost is less than average total cost, average total cost is falling. Whenever marginal cost is greater than ATC, ATC is rising. The marginal cost curve crosses the ATC curve at the ATC curve's minimum, and this minimum is the efficient scale.

some inputs are fixed (e.g. factories, land), the costs of these inputs are FC

fixed costs are viable in the long run;
all inputs are variable (e.g. firms can build more factories or sell existing ones)
in the long run, ATC at any Q is cost per unit using the most efficient mix of inputs for that Q (e.g. the factory size with the lowest ATC)

increasing production allows for greater specialization

coordination problems in large organizations