microeconomics 7 – Flashcards
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Economies of scale may arise from all but one of the following. Which one is it?
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government economic subsidies protect firms from competition to avoid losses
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Fixed costs are important because, at least in the ___________, the firm _______________.
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short run; cannot alter them
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Whatever the firm's quantity of production, _____________ must exceed total costs if it is to earn a profit.
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total revenue
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In microeconomics, the term ___________________ is synonymous with decreasing returns of scale.
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diseconomies of scale
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In microeconomics, the term _____________________ is synonymous with economies of scale.
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increasing returns to scale
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___________ include all spending on labor, machinery, tools, and supplies purchased from other firms.
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Total costs
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Marcella operates a small, but very successful art gallery. All but one of the following can be classified as a variable cost arising from the physical inputs Marcella requires to operate her business. Which is it?
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physical space for the gallery
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If the firm produces 5 units (quantity) that it sells at a price of $20.00 each, what will its profits or losses equal?
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losses equal $55
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______________ include all of the costs of production that increase with the quantity produced.
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Variable costs
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The economies-of-scale curve is a long-run average cost curve, because
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it allows all factors of production to change.
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In order to determine the average variable cost, the firm's variable costs are divided by _______________________.
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the quantity of output
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If a paper mill shuts down its operations for three months so that it produces nothing, its __________________ will be reduced to zero?
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variable costs
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________________________ arises where many firms are competing in a market to sell similar but differentiated products.
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Monopolistic competition
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In order to calculate marginal cost, the change in ______________ is divided by the amount of change in quantity.
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either total cost or variable cost
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Which of the following should typically be ignored because spending has already been made and cannot be changed?
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sunk costs
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In economics, a firm that faces no competitors is referred to as _________________.
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a monopoly
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The _____________________ curve will always lie below the curve for average cost because average cost includes _____________ in the numerator of the calculation.
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average variable cost; fixed costs
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According to the definition of profit, if a profit-maximizing firm will always attempt to produce its desired level of output at the lowest possible cost, then it will
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do so regardless of what type of competition exists in a market.
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In order to reduce the harmful affects of recession and carbon emissions, the government provided tax incentives for manufacturing firm's to ___________________ that provide alternative, more efficient methods of combining inputs to produce output.
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acquire energy efficient production technologies
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A firm's ___________ consist of expenditures that must be made before production starts that typically, over the short run, _______________ regardless of the level of production.
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fixed costs; do not change,
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If a solar panel manufacturer wants to look at its total costs of production in the short run, which of the following would provide a useful starting point?
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divide total costs into two categories: fixed costs that can't be changed in the short run and variable costs that can be
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_____________ is calculated by taking the quantity of everything that is sold and multiplying it by the sale price.
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total revenue
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The ______________ of all firms can be broken down into some common underlying patterns.
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cost structure
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I'MABigCorp. produces and sells kitchen wares. Last year, it produced 7,000 can openers and sold each one for $6. To produce the 7,000 can openers, the company incurred variable costs of $28,000 and a total cost of $45,000. I'MABIGCorp.'s average fixed cost to produce the 7,000 can openers was
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$2.43
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In order to determine ____________, the firm's total costs must be divided by the quantity of its output.
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average cost
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____________________________ occur when the marginal gain in output diminishes as each additional unit of input is added.
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Diminishing marginal returns
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Which of the following falls outside of the classification of business expenditures that fall into the category of variable costs?
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costs of research and development
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If a firm is experiencing _____________________, then as the quantity of output rises, the average cost of production rises.
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decreasing returns to scale
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The term __________________ describes a situation where the quantity of output rises, but the average cost of production falls.
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economies of scale
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Why would labor be treated as a variable cost?
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producing larger quantities of a good or service generally requires more workers
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A situation known as _____________________ occurs when all production inputs are allowed to expand, but that expansion does not result in much of a change in the average cost of production.
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constant returns to scale
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Which of the following falls outside of the classification of business expenses that fall into the category of fixed costs?
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costs incurred in the act of producing
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The term _____________ is used to describe the additional cost of producing one more unit.
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marginal cost
