Econ chapter 12 Final

question

Labour =

answer

question

Capital =

answer

question

Natural resources =

answer

question

output =

answer

question

Technology

answer

the processes a firm uses to turn inputs into outputs of goods and services

question

production function

answer

is the relationship between the inputs employed by a firm and the maximum output (Q) it can produce with those inputs

question

short run

answer

is a time frame in which the quantity of at least one ofa firm's inputs used in production is fixed

question

long run

answer

is a time frame in which the quantities of all inputs -including the size of a firm's physical plant - can be varied

question

to increase output in the short run

answer

firms must increase amount of labor employed

question

total product

answer

is the total output produced in a given period

question

marginal product

answer

of labor is the increase in output that arises from an additional unit of labor employed, with all other inputs remaining the same

question

average product

answer

of labor is equal to total product divided by the quantity of labor employed

question

increasing marginal returns

answer

arise from increased specialization and division of labor

question

diminishing marginal returns

answer

arises because each additional worker has less access to capital and less space in which to work

question

law of diminishing returns

answer

As a firm uses more of a variable input with a given quantity of fixed inputs, the marginal product of the variable input eventually diminishes

question

when marginal product exceeds average product

answer

average product increases

question

when marginal product is below average product

answer

average product decreases

question

when marginal product equal average product

answer

average product is at its maximum

question

3 cost curves

answer

- total cost
- marginal cost
- average cost

question

fixed cost

answer

is the cost of the firm's fixed inputs. Fixed cost remains constant as output changes

question

variable cost

answer

is the cost of the firm's variable inputs. Variable cost changes as output changes

question

total cost

answer

is the cost of all the inputs a firm uses in production

question

total cost calculation

answer

FC + VC

question

marginal cost

answer

is the increase in total cost that results from a one-unit increase in total product

question

marginal cost calculation

answer

change in total cost/ change in quantity of output

question

average fixed cost

answer

is total fixed cost per unit of output

question

average variable cost

answer

is total variable cost per unit of output

question

average total cost

answer

is total cost per unit of output

question

AFC =

answer

FC/Q

question

AVC =

answer

VC/Q

question

ATC =

answer

TC/Q

question

The AFC curve shows

answer

that average fixed cost falls as output increases

question

the ATC curve shows

answer

as output increases, average total cost falls to a minimum and then increases

question

for outputs over which AVC is falling

answer

MC is below AVC

question

for outputs over which AVC is rising

answer

MC is above AVC

question

For the output at minimum AVC

answer

MC = AVC

question

For the outputs over which ATC is falling

answer

MC is below ATC

question

For the outputs over which ATC is rising

answer

MC is above ATC

question

For the output at minimum ATC

answer

MC = ATC

question

MC is at its minimum at the same output level at which

answer

MP is at its maximum

question

When MP is rising

answer

MC is falling

question

AVC is at its minimum at the same output level at which

answer

AP is at its maximum

question

When AP is rising

answer

AVC is falling

question

in the long run inputs and costs are

answer

variable

question

long run average costs (LRAC)

answer

Curve shows the lowest cost at which a firm is able to produce a given quantity of output in the long run, when no inputs are fixed

question

Economies of scale

answer

are features of a firm's technology that lead tofalling long-run average cost as output increases

question

diseconomies of scale

answer

are features of a firm's technology that lead to rising long-run average cost as output increases

question

constant returns to scale

answer

are features of a firm's technology that lead to constant long-run average cost as output increases

question

minimum efficient scale

answer

is the smallest quantity of output at which the long-run average cost reaches its lowest level.

1 of 49

question

Labour =

answer

question

Capital =

answer

question

Natural resources =

answer

question

output =

answer

question

Technology

answer

the processes a firm uses to turn inputs into outputs of goods and services

question

production function

answer

is the relationship between the inputs employed by a firm and the maximum output (Q) it can produce with those inputs

question

short run

answer

is a time frame in which the quantity of at least one ofa firm's inputs used in production is fixed

question

long run

answer

is a time frame in which the quantities of all inputs -including the size of a firm's physical plant - can be varied

question

to increase output in the short run

answer

firms must increase amount of labor employed

question

total product

answer

is the total output produced in a given period

question

marginal product

answer

of labor is the increase in output that arises from an additional unit of labor employed, with all other inputs remaining the same

question

average product

answer

of labor is equal to total product divided by the quantity of labor employed

question

increasing marginal returns

answer

arise from increased specialization and division of labor

question

diminishing marginal returns

answer

arises because each additional worker has less access to capital and less space in which to work

question

law of diminishing returns

answer

As a firm uses more of a variable input with a given quantity of fixed inputs, the marginal product of the variable input eventually diminishes

question

when marginal product exceeds average product

answer

average product increases

question

when marginal product is below average product

answer

average product decreases

question

when marginal product equal average product

answer

average product is at its maximum

question

3 cost curves

answer

- total cost
- marginal cost
- average cost

question

fixed cost

answer

is the cost of the firm's fixed inputs. Fixed cost remains constant as output changes

question

variable cost

answer

is the cost of the firm's variable inputs. Variable cost changes as output changes

question

total cost

answer

is the cost of all the inputs a firm uses in production

question

total cost calculation

answer

FC + VC

question

marginal cost

answer

is the increase in total cost that results from a one-unit increase in total product

question

marginal cost calculation

answer

change in total cost/ change in quantity of output

question

average fixed cost

answer

is total fixed cost per unit of output

question

average variable cost

answer

is total variable cost per unit of output

question

average total cost

answer

is total cost per unit of output

question

AFC =

answer

FC/Q

question

AVC =

answer

VC/Q

question

ATC =

answer

TC/Q

question

The AFC curve shows

answer

that average fixed cost falls as output increases

question

the ATC curve shows

answer

as output increases, average total cost falls to a minimum and then increases

question

for outputs over which AVC is falling

answer

MC is below AVC

question

for outputs over which AVC is rising

answer

MC is above AVC

question

For the output at minimum AVC

answer

MC = AVC

question

For the outputs over which ATC is falling

answer

MC is below ATC

question

For the outputs over which ATC is rising

answer

MC is above ATC

question

For the output at minimum ATC

answer

MC = ATC

question

MC is at its minimum at the same output level at which

answer

MP is at its maximum

question

When MP is rising

answer

MC is falling

question

AVC is at its minimum at the same output level at which

answer

AP is at its maximum

question

When AP is rising

answer

AVC is falling

question

in the long run inputs and costs are

answer

variable

question

long run average costs (LRAC)

answer

Curve shows the lowest cost at which a firm is able to produce a given quantity of output in the long run, when no inputs are fixed

question

Economies of scale

answer

are features of a firm's technology that lead tofalling long-run average cost as output increases

question

diseconomies of scale

answer

are features of a firm's technology that lead to rising long-run average cost as output increases

question

constant returns to scale

answer

are features of a firm's technology that lead to constant long-run average cost as output increases

question

minimum efficient scale

answer

is the smallest quantity of output at which the long-run average cost reaches its lowest level.

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Econ chapter 12 Final

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