Microeconomics chapter 7

question

total cost

answer

the sum of fixed and variable costs of production

question

total product

answer

total output or production by a firm

question

Variable cost

answer

cost of production that increases with the quantity produced; the cost of variables produced

question

Variable input

answer

a factor of production whose quantity the firm can change readily during the relevant period

question

production

answer

the process of combining inputs to produce outputs, ideally of a value greater than the value of the inputs

question

private enterprise

answer

the ownership of businesses by private individuals

question

Marginal product

answer

is the additional output a firm obtains by employing more labor in production.

question

diminishing marginal productivity

answer

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

answer

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

answer

taking total cost and dividing by total output at each different level of output.

question

All inputs are

answer

variable

question

Economies of scale refers to

answer

a situation where as the level of output increases, the average cost decreases.

question

Constant returns to scale refers to

answer

a situation where average cost does not change as output increases.

question

Diseconomies of scale refers to a

answer

situation where as output increases, average costs also increase.

question

The long-run average cost curve shows

answer

the lowest possible average cost of production, allowing all the inputs to production to vary so that the firm is choosing its production technology

1 of 15

question

total cost

answer

the sum of fixed and variable costs of production

question

total product

answer

total output or production by a firm

question

Variable cost

answer

cost of production that increases with the quantity produced; the cost of variables produced

question

Variable input

answer

a factor of production whose quantity the firm can change readily during the relevant period

question

production

answer

the process of combining inputs to produce outputs, ideally of a value greater than the value of the inputs

question

private enterprise

answer

the ownership of businesses by private individuals

question

Marginal product

answer

is the additional output a firm obtains by employing more labor in production.

question

diminishing marginal productivity

answer

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

answer

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

answer

taking total cost and dividing by total output at each different level of output.

question

All inputs are

answer

variable

question

Economies of scale refers to

answer

a situation where as the level of output increases, the average cost decreases.

question

Constant returns to scale refers to

answer

a situation where average cost does not change as output increases.

question

Diseconomies of scale refers to a

answer

situation where as output increases, average costs also increase.

question

The long-run average cost curve shows

answer

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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Microeconomics chapter 7

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