Term
| _______________ is equal to total revenue minus both explicit and implicit costs. |
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Definition
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Term
| The opportunity cost of resources owned by the firm are called _______. |
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Definition
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Term
| The ________ is a time period during which a firm cannot alter some input such as its factory size. |
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Definition
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Term
| A(n) ________ is the relationship between output and inputs. |
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Definition
| production function aka Q=f(inputs) |
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Term
| After some level of output in the short run, each unit of the variable input yields smaller and smaller marginal product. This principle is called ________. |
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Definition
| the law of diminishing return or the law of marginal rate of return |
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Term
| _________ includes costs, such as rent for office space, that cannot vary with the level of output |
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Definition
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Term
| _________, such as wages, vary as the level of output varies. |
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Definition
| Total variable costs (TVC) |
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Term
| ________ is the change in total cost associated with a change in one unit of output. |
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Definition
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Term
| ______ is the sum of average fixed cost and average variable cost. |
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Definition
| Average total cost (ATC or AC) |
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Term
| When long-run average cost decreases as output increases, the firm experiences _______. |
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Definition
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Term
| Payments to nonowers of a firm for their resources are called _______. |
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Definition
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Term
| _______ is the minimum profit necessary to keep a firm in operation. |
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Definition
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Term
| Any resource for which the quantity cannot change during the period of time under consideration is called _______. |
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Definition
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Term
| A period of time so long that all inputs are variable is called a(n) _______. |
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Definition
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Term
| ______ is the change in total output produced by adding one unit of a variable input, with all other inputs used being held consts. |
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Definition
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Term
| Any resource for which the quantity can change during the period of time under consideration is called ________. |
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Definition
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Term
| The sum of total fixed cost and total variable cost at each level of output is called _______. |
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Definition
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Term
| ______ is the total fixed cost divided by the quantity of output produced |
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Definition
| average fixed costs (AFC) |
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Term
| Total variable cost divided by the quantity of output produced is called ______. |
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Definition
| average variable costs (AVC) |
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Term
| The rule that states when mariginal cost is below average cost, average cost falls. When marginal cost is above average cost, average cost rises. When marginal cost equals average cost, average cost is at its minimum point is called ________. |
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Definition
| the marginal average rule |
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Term
| The _____ traces the lowest cost per unit at which a firm can produce any level of output when the firm can build any desired plant size. |
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Definition
| long-run average cost curve. or LRAC Curve or long-run AV Curve. |
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Term
| ______ is a situation in which the long-run average cost curve does not change as the firm increases output. |
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Definition
| constant returns to scale |
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Term
| A situation in which the long-run average cost curve rises as the firm increases output is called _______. |
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Definition
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Term
Payments to nonowners of a firm are called:
a) implicit costs
b) indirect costs
c) explicit costs
d) economic costs |
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Definition
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Term
An economist left his $100,000-a-year teaching position to work full-time in his own consulting business. In the first year, he had total revenue of $200,000 and business expenses of $150,000. He made a(n):
a) implicit profit
b) economic loss
c) economic profit
d) accounting loss but not an economic loss
e) zero economic profit |
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Definition
B
EP=TR-TEC-TIC, so EP = 100,000-150,000-100,000=-50,000 |
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Term
Normal profit is defined as a(n)
a) implicit profit
b)opportunity profit
c) the minimum profit necessary to keep a firm in business
d) all of the above |
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Definition
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Term
| A farm is able to produce 5,000 bushels of peaches per season on 100 acres. Assume it adds one more acre and is able to produce 6,000 bushels per season. The marginal product of the additional acre of land for this farm is: a) 6,000 bushels per acre per year b) 5,000 bushels per acre per year c) 1,000 bushels per acre per year d) 11,000 bushels per acre per year |
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Definition
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Term
| The ____ is the situation in which the marginal product of labor is greater than zero and declining as more labor is hired a) law of demand b) law of diminishing supply c) law of diminishing returns d) law of returns to scale |
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Definition
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Term
| study page 78, 79 and 80 of handout - practice questions with tables |
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Definition
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Term
| Suppose Joe Rich owns his own company and does not pay himself a salary. This means the salary he could have earned in alternative employment is considered an implicit cost for the firm. True or False |
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Definition
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Term
Suppose a firm earns an accounting profit. This means the firm also earns a positive economic profit
True or False |
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Definition
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Term
In the short-run, total fixed costs always exceed total variable costs.
True or False |
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Definition
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Term
A firm's marginal product of labor curve slopes downward throughout its length.
True or False |
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Definition
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Term
In the long run, all costs are considered variable.
True or False |
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Definition
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Term
Marginal cost is calculated by dividing the change in total cost by the change in total output.
True or False |
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Definition
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Term
| If the total variable cost of producing 5 units of output is $10 and the total variable cost of producing 6 units is $15, the marginal cost of producing a sixth unit is $5. True or False |
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Definition
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Term
All of a firm's inputs are considered to be variable in the long run.
True or False |
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Definition
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Term
Each short-run average total cost curve is tangent at its lowest point to the long-run average cost curve.
True or False |
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Definition
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Term
Economies of scale exist over all ranges of output for which short-run average total cost exceeds long-run average cost.
True or False |
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Definition
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Term
| The law of _____ returns is the principle that beyond some point the marginal product decreases as additional units of a variable factor are added to a fixed factor. |
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Definition
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Term
| The average ____ cost is the total variable cost divided by the quantity of output produced. |
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Definition
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Term
| A resource for which the quantity cannot change. |
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Definition
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Term
| The sum of total fixed cost and total variable cost |
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Definition
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Term
| ____ costs are opportunity costs of using resources owned by the firm. |
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Definition
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Term
| ______ product is the change in total output produced by adding one unit of a variable input, with all other inputs used being held consts. |
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Definition
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Term
| The average ____ cost is the total cost divided by the quantity of output produced. |
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Definition
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Term
| Economic ____ is the total revenue minus explicit and implicit costs. |
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Definition
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Term
| The change in total cost when one unit is produced. |
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Definition
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Term
| ____ costs are payments to nonowners of a firm for their resources. |
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Definition
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Term
| A period of time so long that all inputs are variable |
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Definition
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Term
| The average ___ cost is the total fixed cost dived by the quantity of output produced |
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Definition
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Term
| ______ consists of three market characteristics: 1) the number of sellers, 2) nature of the product, and 3) the ease of exit from the market |
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Definition
| market structure (perfect competition, perfect monopoloy, oligopoly, monopoly) |
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Term
| Under ______ the firm is very small relative to the market as a whole, sells a homegeneous product, and firms in the industry are free to enter and exit. |
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Definition
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Term
| A firm in perfect competition is a(n) ____ because it can sell all it wishes at the market determined price, but it will sell nothing above the given market price. |
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Definition
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Term
| A change in total revenue from a one unit change in output is called ______ |
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Definition
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Term
| The ______ for a perfectly competitive firm is a curve showing the relationship between the price of a product and the quantity supplied in the short run. The individual firm always produces along its marginal cost curve above its intersection with the average variable cost curve. |
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Definition
| firm's short-run supply curve |
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Term
| The ____ for a perfectly competitive firm is the horizontal summation of all firm's short-run supply curves in the industry. |
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Definition
| industry's short-run supply curve |
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Term
| The ______ is a curve that shows the quantities supplied by the industry at different prices after firms complete their entry and exit. |
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Definition
| industry's long-run supply curve |
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Term
| An industry in which the expansion of industry output by the entry of new firms has no effect on the firm's cost curves is called _______. |
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Definition
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Term
| ______ is an industry in which the expansion of industry output by the entry of new firms decreases the firm's cost curves. |
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Definition
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Term
| An industry in which the expansion of industry output by the entry of new firms increases the firm's cost curves is called ______. |
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Definition
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Term
| Market structure describes which of the following characteristics? a) the ease of entry into and exit from the market b) the similarity of the product sold c) the number of firms in each industry d) all of the above are true |
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Definition
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Term
Under perfect competition, a firm is a price taker because:
a) setting a price higher than the going price results in profits
b) each firm's product is perceived as different.
c) each firm has a significant market share
d) setting a price higher than the going price reults in zero sales |
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Definition
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Term
In the short run, a perfectly competitive firm's most profitable level of output is where:
a) marginal cost exceeds marginal revenue
b) total revenue is at a maximum
c) marginal cost equals marginal revenue
d) all of the above |
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Definition
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Term
| Study pages 87-89 problems with tables from handout |
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Definition
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Term
In long-run equilibrium, the typical perfectly competitive firm will
a) earn zero economic profit
b) change plant size in the long run
c) change output in the short run
d) do any of the above |
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Definition
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Term
| In long-run equilibrium for a perfectly competitive firm, price equals which of the following? a) economies of real cost b) maximum total revenue. c) diseconomies of scale cost. d) minimum point on the long-run average cost curve |
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Definition
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Term
| In a perfectly competitive industry, assume there is a permanent increase in demand for a product. The process of transition to a new long-run equilibrium will include: a) the exit of firms. b) temporarily lower production costs c)both a and b d) neither a nor b |
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Definition
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Term
In a perfectly competitive industry, assume the short-run average total cost increases as the output of the industry expands. In the long run, the industry supply curve will:
a) first have a positive slope and then a negative slope
b) have a negative slope
c) be perfectly horizontal
d) be perfectly vertical
e) have a positive slope |
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Definition
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Term
| _____ competition is a market structure with a large number of small firms |
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Definition
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Term
| A perfectly competitive _____ short-run supply curve is derived from the horzontal summation of all firms' marginal cost curves in the industry above the minimum point of each firm's average variable cost curve |
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Definition
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Term
| The change in total revenue from the sale of one additional unit output |
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Definition
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Term
| Seller that has no control over price |
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Definition
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