Microeconomics Ch. 7

question

profit

answer

total revenue-total cost

question

business firms

answer

an organization, owned and operated by private individuals, that specializes in production.

question

production

answer

process of combining inputs to make goods and services

question

technology

answer

the methods available for combining inputs to produce a good or service

question

long run

answer

a time horizon long enough for a firm to vary all of its inputs

question

variabe inputs

answer

an input whose usage can change over some time period

question

fixed inputs

answer

an input whose quantity must remain constant over some time period

question

short run

answer

a time horizon during which at least one of the firm's inputs cannot be varied

question

total product

answer

the maximum quantity of output that can be produced from a given combination of inputs

question

the marginal product of labor

answer

the additional output produced when one worker is hired; change in total product divided by the change in the number of workers employed

question

increasing marginal returns to labor

answer

the marginal product of labor increases as more labor is hired

question

diminishin marginal returns to labor

answer

the marginal product decreases as more labor is hired

question

law of diminishing marginal returns

answer

as more anymore of any input is added t a fixed amount of other inputs, its marginal product will eventually decline

question

sunk cost

answer

a cost that has been paid or must be paid regardless of any father action being considered
-should not be considered when making decisions

question

firm's cost

answer

opportunity cost which includes both implicit and explicit costs

question

least cost rule

answer

a firm produces any given output level using the lowest cost combination of inputs available

question

fixed costs

answer

costs of fixed inputs, which remain constant as output changes

question

variable costs

answer

costs of variable inputs, which change with output

question

total fixed cost

answer

the cost of all inputs that are fixed in the short run

question

total variable cost

answer

the cost of all variable inputs used in producing a particular level of output

question

long run total cost

answer

the cost of producing each quantity of output when all inputs are variable and the least cost input mix is chosen

question

long run average total cost

answer

the cost per unity of producing each quantity of output in the long run when all inputs are variable

question

plant

answer

the collection of fixed inputs at a firms disposal

question

economies of scale

answer

long run average total cost decreases as output increases

question

lumpy inputs

answer

an input whose quantity cant be increased gradually as output increase but must instead be adjusted in large jumps

question

diseconomis of scale

answer

when long run cost rises more than in proportion to output, there are diseconomies of scale and the LRATC curve slopes downward

question

constant returns of scale

answer

long run average total cost is unchanged as output increases

question

minimum efficient scale

answer

the lowest output level at which the firms LRATC curve hits bottom

1 of 28

question

profit

answer

total revenue-total cost

question

business firms

answer

an organization, owned and operated by private individuals, that specializes in production.

question

production

answer

process of combining inputs to make goods and services

question

technology

answer

the methods available for combining inputs to produce a good or service

question

long run

answer

a time horizon long enough for a firm to vary all of its inputs

question

variabe inputs

answer

an input whose usage can change over some time period

question

fixed inputs

answer

an input whose quantity must remain constant over some time period

question

short run

answer

a time horizon during which at least one of the firm's inputs cannot be varied

question

total product

answer

the maximum quantity of output that can be produced from a given combination of inputs

question

the marginal product of labor

answer

the additional output produced when one worker is hired; change in total product divided by the change in the number of workers employed

question

increasing marginal returns to labor

answer

the marginal product of labor increases as more labor is hired

question

diminishin marginal returns to labor

answer

the marginal product decreases as more labor is hired

question

law of diminishing marginal returns

answer

as more anymore of any input is added t a fixed amount of other inputs, its marginal product will eventually decline

question

sunk cost

answer

a cost that has been paid or must be paid regardless of any father action being considered
-should not be considered when making decisions

question

firm's cost

answer

opportunity cost which includes both implicit and explicit costs

question

least cost rule

answer

a firm produces any given output level using the lowest cost combination of inputs available

question

fixed costs

answer

costs of fixed inputs, which remain constant as output changes

question

variable costs

answer

costs of variable inputs, which change with output

question

total fixed cost

answer

the cost of all inputs that are fixed in the short run

question

total variable cost

answer

the cost of all variable inputs used in producing a particular level of output

question

long run total cost

answer

the cost of producing each quantity of output when all inputs are variable and the least cost input mix is chosen

question

long run average total cost

answer

the cost per unity of producing each quantity of output in the long run when all inputs are variable

question

plant

answer

the collection of fixed inputs at a firms disposal

question

economies of scale

answer

long run average total cost decreases as output increases

question

lumpy inputs

answer

an input whose quantity cant be increased gradually as output increase but must instead be adjusted in large jumps

question

diseconomis of scale

answer

when long run cost rises more than in proportion to output, there are diseconomies of scale and the LRATC curve slopes downward

question

constant returns of scale

answer

long run average total cost is unchanged as output increases

question

minimum efficient scale

answer

the lowest output level at which the firms LRATC curve hits bottom

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Microeconomics Ch. 7

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