Things i will forget – Flashcards
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Economic profit is equal to total revenue minus the _____________ of producing goods and services.
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Economic profit is equal to total revenue minus the opportunity cost of producing goods and services.
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Accounting profit is equal to ___________ minus _______
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total revenue minus the explicit cost of producing goods and services.
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Economic profit will ________ __________ ______ accounting profit.
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Economic profit will never exceed accounting profit.
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___________ is the amount of money a firm receives from the sale of its output.
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Total revenue is the amount of money a firm receives from the sale of its output.
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Profit is defined as ___ revenue minus ____
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Profit is defined as total revenue minus total cost.
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If you add _____ to profit you will obtain total revenue.
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Total cost can be added to profit to obtain total revenue
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Total revenue equals total output _______
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Total revenue equals total output multiplied by price per unit of output.
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____________ must be forgone to acquire a good.
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Opportunity costs
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Explicit costs require
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an outlay of money by the firm
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When a firm is making a profit-maximizing decision, what is the most important to the decision?
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The cost of something is what you give up to get it
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A production function is a relationship between inputs and ________
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Relationship between inputs and quantity of outputs.
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The marginal product of labor is change in _____ / change in ____
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The marginal product of labor can be defined as change in output / change in labor
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What is correct about a production function for a firm that uses labor to produce about?
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The production function depicts the relationship between the quantity of labor and the quantity of output.
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Figure going up w cookies ) The nature of the underlying production function is output _________ at a ______ rate with additional units of input.
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The nature of the underlying production function is output increases at a decreasing rate with additional units of input.
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What assumption is realistic for a firm in the short run?
The firm can vary ________
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The firm can vary the number of works it employs, but not the size of its factory,
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Assume the firm regard the works it employs as variable and the size of the factory as fixed. This is realistic in the _____ run, but not in the _____ run
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Realistic in the short run, but not in the long run.
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The marginal product of an input in the production process is the increase in _______
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quantity of output obtained from an additional unit of that input
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A total cost curve shows the relationship between the quantity of _____
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quantity of output produced and the total cost of production
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Fixed costs are cost that can be
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incurred even if nothing is produced
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In the short run the size of the factory
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is fixed
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The cost of producing the typical unit of output is the firms
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average total cost
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Average total cost is equal to
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total cost/output
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When the total cost rises when the firm produces an additional unit of output
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marginal cost
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Variable cost divided by quantity is
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None of the above
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Avg. total cost tells us
A) Total cost of the first unit of output, if total cost is divided evenly over the units produced
B) cost of a typical unit of output if total cost is divided evenly over all the units produced
C) Cost of the last unit of output, if total cost does not include a fixed cost
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Cost of a typical unit of output if total cost is divided evenly
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Marginal cost:
a: Value of all resources used in a product process
B: marginal increment to profitability when price is constant
c: amount by which total cost rises when output is increased by one unit
d: amount by which output rises when labor is increased by one unit.
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C: amount by which total cost rises when output is increased by one unit
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Average Total cost will be:
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U: Shape
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Average Fixed cost will be
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always Falling
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Average variable cost will be
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always Rising
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Marginal cost will be
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Always Rising
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If marginal cost is rising,
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marginal product must be falling
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Diminishing marginal product suggests marginal
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product of an extra worker is less than the previous worker's marginal product
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Diminishing marginal product suggests marginal
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cost is upward sloping
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The average fixed cost curve
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Always declines with increased levels of output
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The efficient scale of the firm is the quantity of output that minimizes
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Minimizes average total cost.
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Average total cost is increasing when
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marginal cost is greater than average total cost
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Marginal cost is equal to average total cost when
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average total cost is at its minimum
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Total cost can be divided into
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fixed and variable
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As the quantity of output _____, marginal cost eventually _____
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increases, marginal cost eventually rises
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The firms efficient scale is the quantity of output that MINIMIZES
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average total cost
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When marginal cost is rising, average variable cost
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could be rising or falling
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The firm experiences diseconomies of scale at what output levels
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output levels above N
