question
The _________ cost of any resource used to produce a good is the value or worth the resource would have in its best alternative use.
answer
economic
question
________ costs are the monetary payments a firm makes to purchase resources from others.
answer
Explicit
question
True or false: Hourly labor, raw materials, and fuel are examples of resources a firm can easily adjust.
answer
True
question
Which best describes economic costs?
answer
Payments that must be made to obtain a resource
question
What is the definition of total product (TP)?
answer
the total quantity, or total output, of a particular good or service produced
question
What happens to marginal product when total product is increasing but at a decreasing rate?
answer
Marginal product is positive but falling.
question
The law of ________ returns states that as successive units of a variable resource are added to a fixed resource, beyond some point, the marginal product will decline.
answer
diminishing
question
Variable costs change with the level of ________.
answer
output
question
Which of the following are effects of an increase in the price of labor on the cost curves?
answer
- The average-fixed-cost curve remains the same
- The average-variable-cost, average-total-cost, and marginal-cost curves shift upward.
- The average-variable-cost, average-total-cost, and marginal-cost curves shift upward.
question
A planning curve is another term for which of the following?
answer
Long run average-total-cost curve
question
Why does the law of diminishing returns not account for the U-shape of the long-run average-total-cost curve?
answer
In the long run all resources and inputs are variable
question
A firm's decision about what output level to produce is typically a _______ decision.
answer
marginal
question
What does the long-run average-total-cost curve show?
answer
The lowest average total cost at which any chosen output level can be produced after the firm has had time to make adjustments in plant size.
question
The U-shape of the long-run average-total-cost curve results from which of the following?
answer
- Economies of scale
- Diseconomies of scale
- Diseconomies of scale
question
The lowest level of output at which a firm can minimize long-run average costs is called ________.
answer
minimum efficient scale
question
Learning by doing contributes to a firm's ________.
answer
economies of scale
question
By using economies of scale, successful start-up firms are able to shift their short-run cost curves in which directions?
answer
Downward and to the right
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