Micro Economics Flashcards
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A payment for the use of any resource over and above its opportunity cost is called...
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Economic rent
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Economic rent is any payment...
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in excess of the resource's opportunity cost
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world-class models receive enormous economic rents becuase...
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thier talents and abilities are in a fixed supply
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Economic rent directs resources to...
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the ppl who can use them most efficiently
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The fundamental goal of a firm or business is to...
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earn the highest possible returns
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A business which is owned by two or more ppl is called a...
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partnership
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Which of the following is a disadvantage of the coporate form of business organization?
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Double taxation
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Onw disadvantage of a partnership is...
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Difficulty raising funds
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One advantage of a partnership is..
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They are easy to form
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The main advantage of a coporate form of organization is that...
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shareholders have limited liablility
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In general, which form if business organizatio has the greates capacity to raise large sums of financial capital?
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Corporations
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The owners of a coporation are..
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The shareholders
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implicit costs are measure by..
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The value of the alternative uses of the resources used in production
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The implicit cost incurred by a firm to use its resources to produce its output is the firm's..
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Opportunity cost
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Which is the best example of a firm's implicit costs?
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The opportunity cost of owner-provided labor
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Explicit costs are...
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Opportunity cost of capital
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Interest is paid to
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Owners of the capital
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Interest can be defined as..
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the return paid to owners of capital
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The greater risk of non repayment of a loan..
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higher the expected rate of interest
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Economists generally define the short run as being...
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that period of time in which at least one of the firm's inputs, usually plant size, is fixed.
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Which of the following is TRUE about the long run?
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All resources are variable
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During the short run, a firm cannot...
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Change its plant size
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In economics, how long is the long run?
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Whatever time it takes a firm to vary all inputs
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Production functions indicate the relationship between..
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factor inputs and the quanity of output
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Suppose on worker can produce 15 cookies, two workers can produce 35 togehter and 3 workers can produce 65 togehter. What is the Marginal product of the second worker?
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20 cookies
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A negative value for the marginal physical product would indicate that..
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total output decrease when the unit of the variable input was added
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If marginal product is negative, then..
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total product is fallingq
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When total product is rising...
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marginal product must be positive
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Marginal cost begins to rise when
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Diminishing marginal product begins
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The law of diminishing marginal product states that..
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successive equal-sized increases in labor, when added to fixed factors of production, will result in smaller increases of output.
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What happens at a firm's point of saturation?
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For the first timem hiring an additional worker decreases total product
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TC=???
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TC=FC+VC
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ATC=???
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Total cost/Quantity
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Marginal Cost=??
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Changes in Cost/Changes in Quantity
