question
Accounting cost
answer
- Direct monetary expenditures
- Depreciation
- Begin by assuming accounting costs= economic costs
- Depreciation
- Begin by assuming accounting costs= economic costs
question
Economic costs
answer
accounting costs and opportunity costs of foregone income/returns
question
Short Run
answer
Some resources are variable, intermediate Qs some resources are fixed K,S,E
question
Long Run
answer
all resources are variable
question
Production Function
answer
the relationship between quantity of inputs used to make a good and the quantity of output of that good.
Q=f(resources)=f(K,L,S,E,I)
Q=f(resources)=f(K,L,S,E,I)
question
Total Product Curve of the short-run production function and what it represents
answer
A measure of the change in output associated with a change in the amount of the variable factor, with the quantities of all other factors held constant.
question
Diminishing Marginal Returns
Why does it initially rise and then fall?
Why does it initially rise and then fall?
answer
It initially rises b/c labor is relatively scarce and the capital is relatively abundant. As more labor is hired to work with a fixed amount of capital, the labor has a to of capital to work with. Which caused a division of labor.
However, eventually, as more and more labor is hired to work with the fixed amount of capital, labor becomes abundant and capital becomes scarce. Because the labor does not have much capital to work with and Marginal productivity of labor (MPL) will fall.
However, eventually, as more and more labor is hired to work with the fixed amount of capital, labor becomes abundant and capital becomes scarce. Because the labor does not have much capital to work with and Marginal productivity of labor (MPL) will fall.
question
What happens to the total product curve in the long run?
answer
All inputs are variable and the line curves up.
question
Total Cost
answer
FC+VC (The sum of all costs)
question
Marginal Costs
answer
change in TC / change in Q
(the change in total production cost that comes from making or producing one additional unit)
(the change in total production cost that comes from making or producing one additional unit)
question
Average Total Costs (ATC)
answer
TC/Q (cost per unit)
question
Variable Costs
answer
Labor cost + Product cost
question
Fixed Cost
answer
A cost that does not change, no matter how much of a good is produced
question
The most efficient level of output
answer
Where the ATC is at it's lowest
question
Economies of scale
answer
Factors that cause a producer's average cost per unit to fall as output rises
Economies of scale occur when a company's production increases in a way that reduces per-unit costs.
Economies of scale occur when a company's production increases in a way that reduces per-unit costs.
question
Diseconomies of scale
answer
The situation in which a firm's long-run average costs rise as the firm increases output
When a company or business grows so large that the costs per unit increase.
When a company or business grows so large that the costs per unit increase.
question
4 Characteristics of a Perfectly Competitive (PC) Market
answer
1- Many small producers/sellers & buyers in the market. No individual producer or buyer has market power.
2- Producers are selling identical products
3- No barriers to entry or exit
4- Perfect information
2- Producers are selling identical products
3- No barriers to entry or exit
4- Perfect information
question
market demand curve
answer
The demand curve that shows the quantities demanded by everyone who is interested in purchasing the product
The market demand curve slopes downward
The market demand curve slopes downward
question
How does a a Perfect competitive firm market know what to price their products
answer
Where supply meets demand is where they will price their products so they can sell any number of units at exactly the same price.
question
what is Qo
answer
This is the profit.
The maximizing level of output
The maximizing level of output
question
Profit per Unit
answer
T/Q=P-AC
question
Profit
answer
total revenue - total cost
question
Profit per unit
answer
T/Q = P - AC
question
Total Profit
answer
Profit / QxQ
question
What happens in the long run if there are economic profits
answer
Economic profit is zero in the long run because of the entry of new firms, which drives down the market price.
question
What is the long run equilibrium price for a firm operating in a perfectly competitive market?
answer
...
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
