ch. 6 econ

question

If you can produce more output but wish the same level of input as your rivals

answer

you'll have a competitive advantage

question

Labor productivity during recessions. Positive effects of freeing up machines to be used by remaining workers but negative effects are:

answer

layoffs. Forcing reming workers to perform a wide variety of tasks, then the firm will lost the benefits of speicalization

question

Learning by doing

answer

Achieving greater productivity and lower average total cost through gains in knowledge and skill that accompany repetition of a task; a source of economies of scale.

question

So if you're stuck holding capital constant(Which happens a lot in layoffs, you can't sell off this equipment very quickly, can only produce your labor), then

answer

you're stuck in dealing with your short run production function

question

Labor productivity:

answer

the quantity of goods and services that can be produced by one worker or by one hour of work. Rise or falls depending on where you are in the production function

question

From 0 to 4 q on APl, it is falling.

answer

here

question

Opportunity cost

answer

the most desirable alternative given up as the result of a decision

question

sunk costs

answer

past expenditure that cannot be recovered. Therefore, not an opportunity cost so don't consider it for managerial decisions even though it still appears in financial accounts

question

Is it a sunk cost if you can sell it for the same price?

answer

NO. If you sell it for less, than the difference is the sunk cost

question

Short Run Costs

answer

(T)C=F+VC

question

TC=

answer

TFC+TVC

question

Fixed costs

answer

does not vary with the level of output. includes expenditures on land, office space, production facilities, and other overhead expenses. Are ofter sunk costs, but not always

question

Variable costs(VC)

answer

changes as the quantity of output changes, refers to the costs of variable inputs

question

Total Cost(C)

answer

The sum of fixed and variable costs

question

F and VC should

answer

be based on inputs' opportunity costs

question

Average Cost=

answer

=AFC+AVC=(c/q)

question

AFC=

answer

FC/Q (fixed cost/output)

question

AVC=

answer

VC/Q

question

answer

output

question

AFC Falls as output

answer

rises because the fixed cost is spread over more units

question

AVC (Variable cost per unit of output) may either increase or decrease as output___

answer

rises

question

Average cost(AC) (Average total COst)

answer

May either increase or decrease as output rises

question

Marginal costs are the difference in TC as we increase:

answer

input. ∆TC/∆Q

question

On chart, marginal costs fall because of increased:

answer

specialization(which is good).

question

Once MC starts rising, then its diminishing marginal returns and marginal costs will

answer

Increase, declining marginal production

question

for afc on chart, we should expect it to decline the whole time because:

answer

it's fixed and in the short run. So the fraction of costs per unit get smaller and smaller

question

For AVC on the chart, expect to see it fall over some portion

answer

level off, then rise

question

Marginal cost=

answer

∆C/∆q=∆VC/∆q

question

ONce AVC and AC cross MC

answer

both begin to rise

question

Should AC and AVC cross?

answer

No. They should never cross. When MC crosses AVC at AVC's minimum, it's the point from short run suppply.

question

The more you sell, the more you lose when p is below

answer

AVC

question

In the long run costs,

answer

nothing is fixed and nothing is sunk, need to consider the opportunity cost of everything

1 of 32

question

If you can produce more output but wish the same level of input as your rivals

answer

you'll have a competitive advantage

question

Labor productivity during recessions. Positive effects of freeing up machines to be used by remaining workers but negative effects are:

answer

layoffs. Forcing reming workers to perform a wide variety of tasks, then the firm will lost the benefits of speicalization

question

Learning by doing

answer

Achieving greater productivity and lower average total cost through gains in knowledge and skill that accompany repetition of a task; a source of economies of scale.

question

So if you're stuck holding capital constant(Which happens a lot in layoffs, you can't sell off this equipment very quickly, can only produce your labor), then

answer

you're stuck in dealing with your short run production function

question

Labor productivity:

answer

the quantity of goods and services that can be produced by one worker or by one hour of work. Rise or falls depending on where you are in the production function

question

From 0 to 4 q on APl, it is falling.

answer

here

question

Opportunity cost

answer

the most desirable alternative given up as the result of a decision

question

sunk costs

answer

past expenditure that cannot be recovered. Therefore, not an opportunity cost so don't consider it for managerial decisions even though it still appears in financial accounts

question

Is it a sunk cost if you can sell it for the same price?

answer

NO. If you sell it for less, than the difference is the sunk cost

question

Short Run Costs

answer

(T)C=F+VC

question

TC=

answer

TFC+TVC

question

Fixed costs

answer

does not vary with the level of output. includes expenditures on land, office space, production facilities, and other overhead expenses. Are ofter sunk costs, but not always

question

Variable costs(VC)

answer

changes as the quantity of output changes, refers to the costs of variable inputs

question

Total Cost(C)

answer

The sum of fixed and variable costs

question

F and VC should

answer

be based on inputs' opportunity costs

question

Average Cost=

answer

=AFC+AVC=(c/q)

question

AFC=

answer

FC/Q (fixed cost/output)

question

AVC=

answer

VC/Q

question

answer

output

question

AFC Falls as output

answer

rises because the fixed cost is spread over more units

question

AVC (Variable cost per unit of output) may either increase or decrease as output___

answer

rises

question

Average cost(AC) (Average total COst)

answer

May either increase or decrease as output rises

question

Marginal costs are the difference in TC as we increase:

answer

input. ∆TC/∆Q

question

On chart, marginal costs fall because of increased:

answer

specialization(which is good).

question

Once MC starts rising, then its diminishing marginal returns and marginal costs will

answer

Increase, declining marginal production

question

for afc on chart, we should expect it to decline the whole time because:

answer

it's fixed and in the short run. So the fraction of costs per unit get smaller and smaller

question

For AVC on the chart, expect to see it fall over some portion

answer

level off, then rise

question

Marginal cost=

answer

∆C/∆q=∆VC/∆q

question

ONce AVC and AC cross MC

answer

both begin to rise

question

Should AC and AVC cross?

answer

No. They should never cross. When MC crosses AVC at AVC's minimum, it's the point from short run suppply.

question

The more you sell, the more you lose when p is below

answer

AVC

question

In the long run costs,

answer

nothing is fixed and nothing is sunk, need to consider the opportunity cost of everything

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ch. 6 econ

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