chapter 7
In Economics, the Short run is -Is undefined -Is less than 2 years -A time horizon within which output can be adjusted only by changing the amounts of variable inputs used while fixed inputs remain unchanged; At least one cost is a fixed cost -Is less than 6 months
A time horizon within which output can be adjusted only by changing the amounts of variable inputs used while fixed inputs remain unchanged; At least one cost is a fixed cost
____________________________ occur when the marginal gain in output (quantity produced) diminishes as each additional unit of variable input is added. Diminishing marginal utility Diminishing marginal returns
Diminishing marginal returns
Variable inputs are Inputs that do not impact output and productivity Inputs that can be varied within a short time in order to increase or decrease output Inputs that constantly change Inputs that can be easily substituted or changed for other inputs
Inputs that can be varied within a short time in order to increase or decrease output
Fixed inputs are : -Not taken into consideration for profit -Inputs that cannot be increased or decreased in a short time in order to increase or decrease output -Inputs that are stationary; i.e. the office building or manufacturing factory -Inputs that can never change
Inputs that cannot be increased or decreased in a short time in order to increase or decrease output
________________________ arises where many firms are competing in a market to sell differentiated products. Monopolistic competition Monogopolised competition Perfect competition Oligopolistic competition
Monopolistic competition
accounting profits formula
TR - explicit costs
economic profit formula
TR - explicit costs - implicit costs
In economics, a firm that faces no competitors is referred to as _________________. a monopoly an oligopoly a perfect competitor a single competitor
a monopoly
The difference between Economic profit & Accounting profit is -Economic profit incorporates implicit costs into the cost models when calculating profit -Accounting profit = Total Revenue - Explicit cost & Economic Profit = Total Revenue - Explicit cost - Implicit cost -Accounting profit can overstate the profits if the business owner has spent a lot of money on implicit costs for the business -All of the above
all of the above
In order to determine ____________, the firm's total costs must be divided by the output. average total cost average fixed cost variable cost fixed cost
average total cost
The term __________________ describes a situation where in the long-run, the quantity of output rises yet the average cost of production falls. diminishing marginal returns diseconomies of scale marginal output cost economies of scale
economies of scale
The cost for the delivery truck is an __________ ex or im
explicit
The rent for the store is an __________. explicit or implicit
explicit
The mortgage on the factory is a ___________ fixed or variable
fixed cost
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. fixed costs; increase as output increases variable costs; do not change fixed costs; do not change variable costs; are constantly changing
fixed costs; do not change
The sacrificed $3,000 in interest that the business owner gave up when he removed $100K from his bank to start the business is an __________ ex or im
implicit
The long-run average total cost curve is unique because it allows all factors of production to change. only variable costs are allowed to change. only marginal costs are allowed to change. its fixed costs cannot be changed.
it allows all factors of production to change.
The term _____________ is used to describe the additional cost of producing one more unit. total cost marginal cost variable cost fixed cost
marginal cost
Fixed costs are important because, at least in the ___________, the firm _______________. short run; can alter them business cycle; cannot alter them short run; cannot alter them long run; cannot alter them
short run; cannot alter them
Whatever the firm's quantity of production, _____________ must exceed total costs if it is to earn a profit. variable cost total revenue average cost marginal cost
total revenue
_____________ is calculated by taking the quantity of everything that is sold and multiplying it by the price it was sold at. Total revenue Total profits Average profit margin Total cost
total revenue
The payment for the input of raw materials is usually a ___________. fixed or variable
variable cost