Econ Chapter 7 HW

if a paper mill shuts down its operations for 3 months so that it produces nothing, its _________ will be reduced to zero.

variable costs

________________________ arises where many firms are competing in a market to sell similar but differentiated products.

Monopolistic competition

In econ, a firm that faces no competition is referred to as

a monopoly

in economics, The Short run is

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.

In order to determine ____________, the firm's total costs must be divided by the quantity of its output.

average total cost

____________________________ occur when the marginal gain in output diminishes as each additional unit of input is added.

diminishing marginal returns

The long-run average total cost curve is unique because

it allows all factors of production to change.

what term is used to describe the additional cost of producing one more unit?

marginal cost

this includes all spending on labor, machinery, tools, and supplies purchased from other firms.

total costs

_____________ is calculated by taking the quantity of everything that is sold and multiplying it by the price it was sold at.

total revenue

whatever the firm's quantity of production, ______ must exceed total costs if it is to earn a profit.

total revenue

electricity to run assembly lines is a

variable cost

the payment for the input of raw materials is a

variable cost

the difference between economic profit and accounting profit is

-Economic profit incorporates implicit costs into the cost models when calculating profit -Accounting profit can overstate the profits if the business owner has spent a lot of money on implicit costs for the business -Accounting profit is Total Revenue - Explicit cost, while Economic profit is Economic Profit = Total Revenue - Explicit cost - Implicit cost

The term __________________ describes a situation where in the long-run, the quantity of output rises yet the average cost of production falls.

economies of scale

The rent for the store is an __________.

explicit cos

the amount spent on wages for the employees is an

explicit cost

the cost for the delivery truck is an

explicit cost

Insurance for the building is a

fixed cost

the money spent on wages paid to the employees is a

fixed cost

the mortgage on the factory is a

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; do not change

the sacrifice $3000 in interest that the business owner gave up when he removed $100k from his bank to start the business is an

implicit cost

the sacrificed wage that the business owner cannot earn from their old job because they have started their own full-time business is an

implicit cost

variable inputs are

inputs that can be varied within a short time in order to increase or decrease output

fixed inputs are

inputs that cannot be increased or decreased in a short time in order to increase or decrease output

Fixed costs are important because at least in the _______, the firm ________.

short run; cannot alter them