Module 7 - Assignment Essays

question

technology

answer

the processes a firm uses to turn inputs into outputs

question

technological change

answer

a change in the ability of a firm to produce a given level of output with a fixed quantity of inputs

question

negative technological change

answer

takes inputs and produces less outputs

question

positive technological change

answer

takes inputs and produces more outputs

question

profit

answer

total revenue minus total cost (TR-TC)

question

total revenue

answer

the income a firm receives for the sale of its outputs

question

total cost

answer

market value of the inputs a firm uses in production
-sum of explicit and implicit costs

question

explicit costs

answer

cost that involves a direct payment of money

question

implicit costs

answer

a non-monetary cost associated with an inputs next best alternative

question

economic profit

answer

TR-TC where TC includes explicit and implicit costs

question

accounting profit

answer

TR-TEC ignores the implicit cost

question

short run

answer

a period during which at least one of a firms inputs is fixed (capital)

question

long run

answer

a period in which none of the factors of production are fixed

question

variable cost (VC)

answer

the costs that change as output changes

question

fixed cost (FC)

answer

the costs that remain constant as output changes

question

TC=

answer

FC + VC

question

average total cost (ATC)

answer

total costs divided by quantity of output

question

average fixed cost (AFC)

answer

fixed cost divided by the quantity of output

question

average variable cost (AVC)

answer

variable cost divided by the quantity of output

question

production function

answer

captures the relationship between the inputs employed by a firm and the corresponding quantity of output

question

marginal product

answer

the additional output a firm produces as a result of employing an additional unit of some input

question

law of diminishing returns

answer

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

question

marginal product of labor (MPL)

answer

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

question

marginal cost (MC)

answer

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

question

long run average total cost (ATC)

answer

captures the lowest cost at which a firm can produce a given quantity of output in the long run

question

economies of scale

answer

as output increases, long run average total cost decreases

question

constant returns to scale

answer

long run average total cost remains unchanged as the firm increases output

question

minimum efficient scale

answer

the lowest level of output at which an economy of scale is completely exhausted

question

diseconomies of scale

answer

the situation where a firms long run average total cost increases as output increases

question

economies of scale arise because of

answer

1. specialization
2. bulk discounts (in terms of input prices)
3. some products require a large scale of production

question

diseconomies of scales arise because of

answer

1. the firm employs some inputs that are poorly suited for production
2. coordination efficiencies
3. problems devising an efficient compensation structure

question

coordination inefficiencies

answer

at some point, managers may have difficulty coordinating huge operations

1 of 32

question

technology

answer

the processes a firm uses to turn inputs into outputs

question

technological change

answer

a change in the ability of a firm to produce a given level of output with a fixed quantity of inputs

question

negative technological change

answer

takes inputs and produces less outputs

question

positive technological change

answer

takes inputs and produces more outputs

question

profit

answer

total revenue minus total cost (TR-TC)

question

total revenue

answer

the income a firm receives for the sale of its outputs

question

total cost

answer

market value of the inputs a firm uses in production
-sum of explicit and implicit costs

question

explicit costs

answer

cost that involves a direct payment of money

question

implicit costs

answer

a non-monetary cost associated with an inputs next best alternative

question

economic profit

answer

TR-TC where TC includes explicit and implicit costs

question

accounting profit

answer

TR-TEC ignores the implicit cost

question

short run

answer

a period during which at least one of a firms inputs is fixed (capital)

question

long run

answer

a period in which none of the factors of production are fixed

question

variable cost (VC)

answer

the costs that change as output changes

question

fixed cost (FC)

answer

the costs that remain constant as output changes

question

TC=

answer

FC + VC

question

average total cost (ATC)

answer

total costs divided by quantity of output

question

average fixed cost (AFC)

answer

fixed cost divided by the quantity of output

question

average variable cost (AVC)

answer

variable cost divided by the quantity of output

question

production function

answer

captures the relationship between the inputs employed by a firm and the corresponding quantity of output

question

marginal product

answer

the additional output a firm produces as a result of employing an additional unit of some input

question

law of diminishing returns

answer

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

question

marginal product of labor (MPL)

answer

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

question

marginal cost (MC)

answer

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

question

long run average total cost (ATC)

answer

captures the lowest cost at which a firm can produce a given quantity of output in the long run

question

economies of scale

answer

as output increases, long run average total cost decreases

question

constant returns to scale

answer

long run average total cost remains unchanged as the firm increases output

question

minimum efficient scale

answer

the lowest level of output at which an economy of scale is completely exhausted

question

diseconomies of scale

answer

the situation where a firms long run average total cost increases as output increases

question

economies of scale arise because of

answer

1. specialization
2. bulk discounts (in terms of input prices)
3. some products require a large scale of production

question

diseconomies of scales arise because of

answer

1. the firm employs some inputs that are poorly suited for production
2. coordination efficiencies
3. problems devising an efficient compensation structure

question

coordination inefficiencies

answer

at some point, managers may have difficulty coordinating huge operations

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