chapter 9 econ 102 - Custom Scholars
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# chapter 9 econ 102

question
The economic cost of any resource used to produce a good
the value or worth the resource would have in its best alternative use.
question
economic costs
Payments that must be made to obtain a resource
question
explicit costs definition
the monetary payments a firm makes to purchase resources from others
question
the concept of explicit costs
-A firm's monetary payments to those who supply labor services, materials, fuel, and transportation services.
-A firm's monetary payments made for the use of resources owned by others.
question
What resources can a firm easily and quickly adjust?
Fuel, Raw materials, and hourly labor
question
total product (TP) definition
The total quantity, or total output, of a particular good or service produced
question
The law of diminishing returns
as successive units of a variable resource are added to a fixed resource, beyond some point, the marginal product will decline.
question
what remains after a firm has paid its explicit costs?

Accounting profit

question
fixed costs
part of the simple existence of a firm's plant and must be paid even when output is zero.
question
Which best characterizes variable costs?
Costs that change with the level of output
question
what happens to average fixed cost when output increases
Average fixed cost declines as output increases.
question
Total product
the total quantity of a specific good produced
question
Average fixed cost formula
total fixed cost divided by the amount of output
question
average variable cost formula
Total variable cost divided by output (Q)
question
Fixed costs
do not vary with changes in output
question
Average total cost formula
total fixed cost divided by output plus total variable cost divided by the output
question
Variable costs change with...
the level of output
question
marginal cost (MC) formula
dividing the change in total cost by the change in output
question
As production increases, average fixed cost declines.
question
marginal decision
A firm's decision about what output level to produce
question
average fixed cost formula
Total fixed cost divided by output
question
Average variable cost formula
total variable cost divided by total output
question
how does an increase in the price of labor effect Average-fixed-cost
no effect
question
Average total cost (ATC) for any output level Q formula
-dividing total cost (TC) by that output (Q).
-adding average fixed cost (AFC) and average variable cost (AVC) at that output.
question
Marginal cost
the extra cost of producing one more unit of output
question
industry and its individual firms
Firms can undertake all desired resource adjustments in the long run.
question
a firm
Its decisions regarding what output level to produce are typically marginal decisions.
question
A planning curve is also called...
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?
In the long run all resources and inputs are variable.
question
effects of an increase in the price of labor on the cost curves
-The average-fixed-cost curve remains the same.
-The average-variable-cost, average-total-cost, and marginal-cost curves shift upward.
question
what explains the downward-sloping part of the long-run average-total-cost curve?
Economies of scale
question
the long run
firms are able to adjust all resources
question
What does the long-run average-total-cost curve show?
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
examples of labor specialization
-Hiring more workers in order to subdivide tasks
-Assigning each worker one task instead of five or six
question
The U-shape of the long-run average-total-cost curve results from which of the following?

-Diseconomies of scale

-Economies of scale

question
Learning by doing contributes to a firm's ______.
economies of scale
question
constant returns to scale
A firm's 10% increase in given inputs, causing a proportionate 10% increase in output
question
What is another term for economies of scale?
Economies of mass production
question
Increased ______ ______ becomes more achievable as a plant increases in size.
labor specialization
question
Start-up firms achieve ______ __ ______ from learning by doing and through increased specialization of labor, management, and equipment.
economies of scale
question
example of Learning by doing

A firm grows from one to three plants. As a result, the firm's sales increase, leading to greater marketing expertise.

question
The flat section
section of a long-run average total cost curve depicts constant returns to scale
question
minimum efficient scale
The lowest level of output at which a firm can minimize long-run average costs
question
By using economies of scale, successful start-up firms are able to shift their short-run cost curves in which directions?
Downward and to the right
question
Assuming technology and production techniques are fixed and cannot change, if beyond some point of production a firm experiences declining units of additional output with each additional unit of labor input, then the firm is experiencing the effects of the law of ______.
diminishing returns
question
True or false: Hourly labor, raw materials, and fuel are examples of resources a firm can easily adjust.
True
question
True or false: Important determinants of an industry's structure are economies of scale and revenue.
False
question
What is the total revenue if the economic profit is \$24,000 and the economic costs are \$96,000?
\$120,000
question
If economic cost is \$96,000 and total revenue is \$120,000, what is the economic profit?
\$24,000
question
Your company's total sales revenue for the month is \$150,000; the costs to produce your products are \$12,000 for rent, \$6,000 for utilities, and \$42,000 for employee wages. What is your accounting profit?
\$90,000
1 of 50
question
The economic cost of any resource used to produce a good
the value or worth the resource would have in its best alternative use.
question
economic costs
Payments that must be made to obtain a resource
question
explicit costs definition
the monetary payments a firm makes to purchase resources from others
question
the concept of explicit costs
-A firm's monetary payments to those who supply labor services, materials, fuel, and transportation services.
-A firm's monetary payments made for the use of resources owned by others.
question
What resources can a firm easily and quickly adjust?
Fuel, Raw materials, and hourly labor
question
total product (TP) definition
The total quantity, or total output, of a particular good or service produced
question
The law of diminishing returns
as successive units of a variable resource are added to a fixed resource, beyond some point, the marginal product will decline.
question
what remains after a firm has paid its explicit costs?

Accounting profit

question
fixed costs
part of the simple existence of a firm's plant and must be paid even when output is zero.
question
Which best characterizes variable costs?
Costs that change with the level of output
question
what happens to average fixed cost when output increases
Average fixed cost declines as output increases.
question
Total product
the total quantity of a specific good produced
question
Average fixed cost formula
total fixed cost divided by the amount of output
question
average variable cost formula
Total variable cost divided by output (Q)
question
Fixed costs
do not vary with changes in output
question
Average total cost formula
total fixed cost divided by output plus total variable cost divided by the output
question
Variable costs change with...
the level of output
question
marginal cost (MC) formula
dividing the change in total cost by the change in output
question
As production increases, average fixed cost declines.
question
marginal decision
A firm's decision about what output level to produce
question
average fixed cost formula
Total fixed cost divided by output
question
Average variable cost formula
total variable cost divided by total output
question
how does an increase in the price of labor effect Average-fixed-cost
no effect
question
Average total cost (ATC) for any output level Q formula
-dividing total cost (TC) by that output (Q).
-adding average fixed cost (AFC) and average variable cost (AVC) at that output.
question
Marginal cost
the extra cost of producing one more unit of output
question
industry and its individual firms
Firms can undertake all desired resource adjustments in the long run.
question
a firm
Its decisions regarding what output level to produce are typically marginal decisions.
question
A planning curve is also called...
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?
In the long run all resources and inputs are variable.
question
effects of an increase in the price of labor on the cost curves
-The average-fixed-cost curve remains the same.
-The average-variable-cost, average-total-cost, and marginal-cost curves shift upward.
question
what explains the downward-sloping part of the long-run average-total-cost curve?
Economies of scale
question
the long run
firms are able to adjust all resources
question
What does the long-run average-total-cost curve show?
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
examples of labor specialization
-Hiring more workers in order to subdivide tasks
-Assigning each worker one task instead of five or six
question
The U-shape of the long-run average-total-cost curve results from which of the following?

-Diseconomies of scale

-Economies of scale

question
Learning by doing contributes to a firm's ______.
economies of scale
question
constant returns to scale
A firm's 10% increase in given inputs, causing a proportionate 10% increase in output
question
What is another term for economies of scale?
Economies of mass production
question
Increased ______ ______ becomes more achievable as a plant increases in size.
labor specialization
question
Start-up firms achieve ______ __ ______ from learning by doing and through increased specialization of labor, management, and equipment.
economies of scale
question
example of Learning by doing

A firm grows from one to three plants. As a result, the firm's sales increase, leading to greater marketing expertise.

question
The flat section
section of a long-run average total cost curve depicts constant returns to scale
question
minimum efficient scale
The lowest level of output at which a firm can minimize long-run average costs
question
By using economies of scale, successful start-up firms are able to shift their short-run cost curves in which directions?
Downward and to the right
question
Assuming technology and production techniques are fixed and cannot change, if beyond some point of production a firm experiences declining units of additional output with each additional unit of labor input, then the firm is experiencing the effects of the law of ______.
diminishing returns
question
True or false: Hourly labor, raw materials, and fuel are examples of resources a firm can easily adjust.
True
question
True or false: Important determinants of an industry's structure are economies of scale and revenue.
False
question
What is the total revenue if the economic profit is \$24,000 and the economic costs are \$96,000?
\$120,000
question
If economic cost is \$96,000 and total revenue is \$120,000, what is the economic profit?
\$24,000
question
Your company's total sales revenue for the month is \$150,000; the costs to produce your products are \$12,000 for rent, \$6,000 for utilities, and \$42,000 for employee wages. What is your accounting profit?
\$90,000

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