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