BUS 207 - Module 3 - Custom Scholars
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BUS 207 – Module 3

question
Productivity
answer
measures output per unit of input(s)
question
For firms and industries, productivity growth leads to...
answer
lower unit costs, higher market shares, higher profits
question
For nations, productivity growth leads to....
answer
higher GDP/capita, higher wages, higher standard of living
question
Production Function
answer
indicates the maximum output (Q) that can be produced for every specified combinations
question
Long-Run Production Function
answer
Q = f (K, L ; t) - all inputs are variable
question
Short-Run Production Function
answer
Q = f (K, L ; t) - K & t are fixed
question
Production function may be applied to most firms and countries so long as...
answer
inputs and outputs are clearly defined
question
Average Product of Labour (APl)
answer
Q / L
question
Marginal Product of Labour (MPl)
answer
change in Q / change in L
question
APl is the most common measure of productivity for firms because...
answer
easy measurement, and can be used across all industries
question
Law of Diminishing Returns
answer
as units of one product are added, resulting additions to output will eventually begin to decrease
question
Average Product of Labour (Graph)
answer
slope of a line from the origin to any intersection on the production curve
question
Marginal Product of Labour (Graph)
answer
slope of the tangent of the production curve
question
Labour Productivity
answer
output per unit of labour
question
In short-run productivity measures, you should always use a benchmark like...
answer
similar organizations, average competitor
question
Another equation for MC = ML
answer
P*MPl = w
question
Long-run productivity growth depends on....
answer
technological change, capital investments, human capital, returns to scale
question
Labour productivity in the long-run can be increased/shifted by....
answer
more and better capital, technological change, and higher quality workers
question
Returns to Scale
answer
the effect on Q of increasing all inputs by the same amount
question
Constant Returns to Scale
answer
Q increases by S
question
Increasing Returns to Scale
answer
Q increases by more than S
question
Decreasing Returns to Scale
answer
Q increases by less than S
question
Cobb-Douglas Production Function
answer
q = 𝒂LᶜKᵈ
question
Production Analysis
answer
the relationship between physical outputs and physical inputs
question
Cost Analysis
answer
examine the way in which dollar costs are affected by output choices and input prices
question
Opportunity Costs
answer
foregone benefits associated with using resources in their best alternative use
question
Economic Profits
answer
difference between what is being earned and what could be earned in the next best alternative
question
Fixed Costs
answer
do not vary with ouput
question
Variable costs
answer
do vary with output
question
In the long run...
answer
fixed costs are avoidable, variable costs are unavoidable
question
In the short run,
answer
some costs are fixed and some are variable
question
Sunk Costs
answer
expenditures that have already been incurred and cannot be recovered (entry barriers)
question
Sunk costs are irrelevant to....
answer
operating decisions and forward looking decisions
question
Some exit costs act as sunk costs that result in...
answer
exit barriers
question
Sunk Cost Effect
answer
results in an incumbent firm that slow to adopt in a new technology
question
Real economies of scale arise from...
answer
more efficient use of real resources
question
Precuniary economies of scale arise from...
answer
reduced input prices
question
Minimum Efficient Scale (MES)
answer
the minimum plant or firm size at which economies of scale are exhausted
question
Minimum efficient scale is an important determinant of...
answer
market structure (# of firms in an industry)
question
Learning/Experience Curve
answer
charts with cost reductions associated with higher cumulative output
question
Total costs are affected not just by scale of operations but also by the....
answer
composition of outputs
question
Economies of Scope
answer
present when the joint output of a single firm costs less than the sum of costs
question
Economies of scope arise because of...
answer
shared inputs, and costs complementaries
question
Shared Inputs
answer
occur at the level of production unit or multi-plant level
question
Cost Complements
answer
occur when producing more of one good reduces the cost of another good
question
Cost complements are occurring because of
answer
knowledge spillovers
1 of 46
question
Productivity
answer
measures output per unit of input(s)
question
For firms and industries, productivity growth leads to...
answer
lower unit costs, higher market shares, higher profits
question
For nations, productivity growth leads to....
answer
higher GDP/capita, higher wages, higher standard of living
question
Production Function
answer
indicates the maximum output (Q) that can be produced for every specified combinations
question
Long-Run Production Function
answer
Q = f (K, L ; t) - all inputs are variable
question
Short-Run Production Function
answer
Q = f (K, L ; t) - K & t are fixed
question
Production function may be applied to most firms and countries so long as...
answer
inputs and outputs are clearly defined
question
Average Product of Labour (APl)
answer
Q / L
question
Marginal Product of Labour (MPl)
answer
change in Q / change in L
question
APl is the most common measure of productivity for firms because...
answer
easy measurement, and can be used across all industries
question
Law of Diminishing Returns
answer
as units of one product are added, resulting additions to output will eventually begin to decrease
question
Average Product of Labour (Graph)
answer
slope of a line from the origin to any intersection on the production curve
question
Marginal Product of Labour (Graph)
answer
slope of the tangent of the production curve
question
Labour Productivity
answer
output per unit of labour
question
In short-run productivity measures, you should always use a benchmark like...
answer
similar organizations, average competitor
question
Another equation for MC = ML
answer
P*MPl = w
question
Long-run productivity growth depends on....
answer
technological change, capital investments, human capital, returns to scale
question
Labour productivity in the long-run can be increased/shifted by....
answer
more and better capital, technological change, and higher quality workers
question
Returns to Scale
answer
the effect on Q of increasing all inputs by the same amount
question
Constant Returns to Scale
answer
Q increases by S
question
Increasing Returns to Scale
answer
Q increases by more than S
question
Decreasing Returns to Scale
answer
Q increases by less than S
question
Cobb-Douglas Production Function
answer
q = 𝒂LᶜKᵈ
question
Production Analysis
answer
the relationship between physical outputs and physical inputs
question
Cost Analysis
answer
examine the way in which dollar costs are affected by output choices and input prices
question
Opportunity Costs
answer
foregone benefits associated with using resources in their best alternative use
question
Economic Profits
answer
difference between what is being earned and what could be earned in the next best alternative
question
Fixed Costs
answer
do not vary with ouput
question
Variable costs
answer
do vary with output
question
In the long run...
answer
fixed costs are avoidable, variable costs are unavoidable
question
In the short run,
answer
some costs are fixed and some are variable
question
Sunk Costs
answer
expenditures that have already been incurred and cannot be recovered (entry barriers)
question
Sunk costs are irrelevant to....
answer
operating decisions and forward looking decisions
question
Some exit costs act as sunk costs that result in...
answer
exit barriers
question
Sunk Cost Effect
answer
results in an incumbent firm that slow to adopt in a new technology
question
Real economies of scale arise from...
answer
more efficient use of real resources
question
Precuniary economies of scale arise from...
answer
reduced input prices
question
Minimum Efficient Scale (MES)
answer
the minimum plant or firm size at which economies of scale are exhausted
question
Minimum efficient scale is an important determinant of...
answer
market structure (# of firms in an industry)
question
Learning/Experience Curve
answer
charts with cost reductions associated with higher cumulative output
question
Total costs are affected not just by scale of operations but also by the....
answer
composition of outputs
question
Economies of Scope
answer
present when the joint output of a single firm costs less than the sum of costs
question
Economies of scope arise because of...
answer
shared inputs, and costs complementaries
question
Shared Inputs
answer
occur at the level of production unit or multi-plant level
question
Cost Complements
answer
occur when producing more of one good reduces the cost of another good
question
Cost complements are occurring because of
answer
knowledge spillovers

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