Microeconomics chapter 7 - Custom Scholars
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# Microeconomics chapter 7

question
total cost
the sum of fixed and variable costs of production
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total product
total output or production by a firm
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Variable cost
cost of production that increases with the quantity produced; the cost of variables produced
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Variable input
a factor of production whose quantity the firm can change readily during the relevant period
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production
the process of combining inputs to produce outputs, ideally of a value greater than the value of the inputs
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private enterprise
the ownership of businesses by private individuals
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Marginal product
is the additional output a firm obtains by employing more labor in production.
question
diminishing marginal productivity
meaning the additional output obtained is less than for the previous increment to labor. Mathematically, marginal product is the slope of the total product curve.
question
We calculate marginal cost by
taking the change in total cost (or the change in variable cost, which will be the same thing) and dividing it by the change in output,
question
We calculate average total cost by
taking total cost and dividing by total output at each different level of output.
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All inputs are
variable
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Economies of scale refers to
a situation where as the level of output increases, the average cost decreases.
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Constant returns to scale refers to
a situation where average cost does not change as output increases.
question
Diseconomies of scale refers to a
situation where as output increases, average costs also increase.
question
The long-run average cost curve shows
the lowest possible average cost of production, allowing all the inputs to production to vary so that the firm is choosing its production technology
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question
total cost
the sum of fixed and variable costs of production
question
total product
total output or production by a firm
question
Variable cost
cost of production that increases with the quantity produced; the cost of variables produced
question
Variable input
a factor of production whose quantity the firm can change readily during the relevant period
question
production
the process of combining inputs to produce outputs, ideally of a value greater than the value of the inputs
question
private enterprise
the ownership of businesses by private individuals
question
Marginal product
is the additional output a firm obtains by employing more labor in production.
question
diminishing marginal productivity
meaning the additional output obtained is less than for the previous increment to labor. Mathematically, marginal product is the slope of the total product curve.
question
We calculate marginal cost by
taking the change in total cost (or the change in variable cost, which will be the same thing) and dividing it by the change in output,
question
We calculate average total cost by
taking total cost and dividing by total output at each different level of output.
question
All inputs are
variable
question
Economies of scale refers to
a situation where as the level of output increases, the average cost decreases.
question
Constant returns to scale refers to
a situation where average cost does not change as output increases.
question
Diseconomies of scale refers to a
situation where as output increases, average costs also increase.
question
The long-run average cost curve shows
the lowest possible average cost of production, allowing all the inputs to production to vary so that the firm is choosing its production technology

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