Microeconomics Quiz 2 Terms - Assignment Essays %

question

Consumption

answer

dollars worth of expenditure on consumer goods

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Marginal Product of Labor

answer

the rate at which output rises given increase in the labor force

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Law of Diminishing Returns

answer

after some point, in the presence of a fixed output, subsequent equal increments of a variable input yield ever smaller increments of output

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Physical Capital

answer

plant and equipment, roads and vehicles, inventories of semi-finished and finished products, state of knowledge we have accumulated, level of training or expertise of our labor force

question

Investment

answer

production of capital goods

question

Demand Curve for Investments

answer

for any given interest rate, it tells the amount of investment that entrepreneurs want to do

question

Supply Curve of Savings

answer

gives the amount of saving the consumer will do for any given interest rate

question

Equilibrium Needs

answer

1. every consumer is on the highest indifference curve
2. entrepreneurs are maximizing profit
3. total supply of C1 = total demand for C1
4. total supply of C2 = total demand for C2
5. S = I

question

Economic Efficiency

answer

1. it is impossible for two consumers to conduct a mutually beneficial trade
2. it is impossible to make any consumer better off by sliding along the PPC

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Collateral

answer

property or other assets that a borrower offers a lender to secure a loan

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Explicit Costs

answer

input costs that require and outlay of money by the firm

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implicit costs

answer

input costs that do not require an outlay of money

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production function

answer

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

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efficient scale

answer

the quantity of output that minimizes average total cost

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economies of scale

answer

long run average total cost falls as the quantity of output increases

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diseconomies of scale

answer

long run average total cost rises as the quantity of output increases

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constant returns to scale

answer

long run average total cost remains the same as the quantity of output changes

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competitive market

answer

a market with any buyers and sellers trading identical products so that each buyer and seller is a price taker

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sunk cost

answer

a cost that has already been committed and cannot be recovered

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natural monopoly

answer

when a firm can supply a good or service to an entire market at a smaller cost than two or more firms

1 of 20

question

Consumption

answer

dollars worth of expenditure on consumer goods

question

Marginal Product of Labor

answer

the rate at which output rises given increase in the labor force

question

Law of Diminishing Returns

answer

after some point, in the presence of a fixed output, subsequent equal increments of a variable input yield ever smaller increments of output

question

Physical Capital

answer

plant and equipment, roads and vehicles, inventories of semi-finished and finished products, state of knowledge we have accumulated, level of training or expertise of our labor force

question

Investment

answer

production of capital goods

question

Demand Curve for Investments

answer

for any given interest rate, it tells the amount of investment that entrepreneurs want to do

question

Supply Curve of Savings

answer

gives the amount of saving the consumer will do for any given interest rate

question

Equilibrium Needs

answer

1. every consumer is on the highest indifference curve
2. entrepreneurs are maximizing profit
3. total supply of C1 = total demand for C1
4. total supply of C2 = total demand for C2
5. S = I

question

Economic Efficiency

answer

1. it is impossible for two consumers to conduct a mutually beneficial trade
2. it is impossible to make any consumer better off by sliding along the PPC

question

Collateral

answer

property or other assets that a borrower offers a lender to secure a loan

question

Explicit Costs

answer

input costs that require and outlay of money by the firm

question

implicit costs

answer

input costs that do not require an outlay of money

question

production function

answer

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

question

efficient scale

answer

the quantity of output that minimizes average total cost

question

economies of scale

answer

long run average total cost falls as the quantity of output increases

question

diseconomies of scale

answer

long run average total cost rises as the quantity of output increases

question

constant returns to scale

answer

long run average total cost remains the same as the quantity of output changes

question

competitive market

answer

a market with any buyers and sellers trading identical products so that each buyer and seller is a price taker

question

sunk cost

answer

a cost that has already been committed and cannot be recovered

question

natural monopoly

answer

when a firm can supply a good or service to an entire market at a smaller cost than two or more firms

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