Chap 11 eco – Flashcards
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Steve owns a bike store if he decided to expand the size of the store so that he could sell more bikes how would he know if he is experiencing economies of scale in the long run
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His long-run average cost of selling each bike decreases
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An explicit cost for a business manufactures bicycles would be the
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Wages paid to employees
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In the short run the cost of _____ is the variable whereas the cost of _____ is fixed
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Labor; capital
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Marginal product is the change in
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Total output divided by the change in input
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Assume that a firm hires an additional employee if the marginal product for that employee is greater than the previous employee hired it must be because
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There are gains from specialization
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A firms economic profit is always less then it's accounting profit because
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Economic profit considers implicit costs which accounting profit does not
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The three primary factors of production are
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land, labor, and capital
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If a firm hired another worker in her marginal product of labor is positive we know that the firms total output is
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Increasing
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Is the firm wants to cut it's costing her more efficient production we should assume that the firm is trying to
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Increase its profits
