Economics 7 – Flashcards
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The total cost of 4 units of output is $210 = $50 (fixed cost) + $160 (total variable cost.) To find _________________, divide this by the number of units of output: $210 / 4 = $52.50 per unit.
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average total cost
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If a firm is experiencing economies of scale, its short-run average total cost curves will be _________.
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falling
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Explicit costs and implicit costs:
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are alike in that both represent opportunity costs.
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Firms wishing to utilize a scarce resource must bid it away from alternative uses, thereby incurring an ________________, whether explicit or implicit.
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opportunity cost
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_______________ is found by subtracting both these types of opportunity costs from total revenue.
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Economic profit
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Suppose that a business incurred implicit costs of $300,000 and explicit costs of $1,300,000 over the past year. If the firm earned $1,400,000 in revenue, its:
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accounting profits were $100,000 and its economic losses were $200,000.
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_______ is revenue minus its explicit costs.
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Accounting profit
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____________ is revenue minus all costs, both explicit and implicit.
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Economic profit
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________________ short-run cost curves would not be affected by an increase in the wage paid to a firm's labor?
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Average fixed cost
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___ is a variable resource in the short run.
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Labor
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An increase in the wage increases the firm's ________ and its .
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1. Marginal cost . 2. Average variable cost
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If marginal product is positive but falling:
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total product is increasing at a decreasing rate.
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______________ is the increase in output attributable to the employment of another worker.
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Marginal product
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The distinguishing feature of the short run is that:
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at least one input is fixed.
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In the long run, all ___________ while the short run is characterized by restrictions on one or more inputs.
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inputs are variable
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________________ is the increase in cost associated with the next unit.
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Marginal cost
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For any given level of output, the firm should select the plant size that minimizes the _________________________.
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average total cost of production
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Suppose a particular firm exhibits constant returns to scale as it increases its output over any reasonable range. If it increases all its inputs by 10%, its:
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output will increase by 10%.
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____________ occur when a proportional increase in all inputs increases output by the same proportion, leaving average cost unchanged.
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Constant returns to scale
