Econ midterm 2

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If a perfectly competitive​ firm's total revenue is less than its total variable​ cost, the firm

should stop production by shutting down temporarily.sh

If the market price is​ $25, the average revenue of selling five units is

$25

short run

A period of time in which at least one of the firm's inputs is fixed. The fixed inputs cannot be adjusted. In the short run only variable inputs can be adjusted (same amount of time for the tennis ball activity)

law of diminishing returns

At some point, adding more of a variable input (laborers )to the same amount of a fixed input (kettles) will cause the marginal product of the variable input to decline that at someth ​ point, adding more of a variable input to a given amount of a fixed​ input, will cause the marginal product of the variable input to decline.

Which of the following is an example of positive technological​ change?

A​ firm's workers participate in a training program designed to increase the number of surf boards they can produce per day.

Jennifer Borts moves her office from the premises she rents at a local mall to her home. As a result of this move

Jennifer's explicit costs fall and her implicit costs rise.

After​ Suzie, owner of​ Suzie's Sweet​ Shop, hires her 8th worker the average product of labor declines. Which of the following statements must be true​?

The marginal product of the 8th worker is less than the average product of labor before the 8th worker was hired. Th

Which of the following is true of the relationship between the average product of labor and the marginal product of labor

Whenever the marginal product of labor is less than the average product of​ labor, the average product of labor must be decreasing.

long run

The period of time in which a firm can vary ALL of its inputs. No inputs are fixed, the firm can adopt new technology, add assets like machinery, and increase or decrease the size of its physical plant

explicit cost

a cost that involves spending money

implicit cost

a non-monetary opportunity cost "For example, an employee could take a vacation and travel. The explicit costs would include travel expenses, the cost of a hotel room, and costs related to entertainment. The implicit costs relate to the tradeoff, namely the wages that the employee could have earned if the vacation was not taken"

A buyer or seller that is unable to affect the market price is called

a price taker

A perfectly competitive firm has to charge the same price as every other firm in the market.​ Therefore, the firm

a price taker

​Further, positive technological change is defined as

being able to produce more output using the same inputs and being able to produce the same output using fewer inputs.

The marginal product of labor is calculated using the formula

change in ​Q/change in L

variable costs

costs that can vary or change. examples of inputs with variable costs are workers (labor) and raw materials

fixed costs

costs that remain constant. examples of inputs with fixed costs includes facilities, insurance, machinery

Economic cost of production differ from accounting costs in that

economic cost adds the opportunity cost of a firm using its own resources while accounting cost does not.ec

When a firm produces more output using the same inputs or the same output using fewer inputs we say that the firm

experiences positive technological change

marginal product of labor

how much the "last worker" added to the total output

​Ted's Pancake Kitchen suffers a shortminusrun loss. When should Ted decide to shut down rather than continue to​ produce?

if his Pancakeif ​ Kitchen's revenue is less than its variable costs

The long run refers to a time period

long enough for a firm to vary all of its inputs, to adopt new technology and change the size of its physical plant.

technology change

more outputs with the same inputs or the same output with fewer inputs example: The telephone is an example of a product that has undergone a technological change. It has undergone many different changes over the years that have made it more efficient. Processes or products, such as the telephone, move through technological change in three stages:

The marginal product of labor is defined as

the additional output that results when one more worker is ​hired, holding all other resources constant.

total costs

the cost of all the inputs a firm uses in production

The production function is the relationship between

the inputs employed by a firm and the maximum output it can produce with those inputs.th

In​ economics, the best definition of technology is

the process a firm uses to turn inputs into outputs.

production function

the relationship between a firms inputs and outputs This production function says that a firm can produce one unit of output for every unit of capital or labor it employs.

The basic activity of a firm is

to use inputs to produce outputs of goods and services

Average total cost is

total cost divided by quantity

Which of the following cost will not change as output​ changes?

total fixed costs

perfectly competitive market

unable to affect market price, many buyers and sellers, identical products,


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