ECON 201 PQ 8

total revenue

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

fixed costs; do not change

. 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.

do so regardless of what type of competition exists in a market

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

short run; cannot alter them

Fixed costs are important because, at least in the ___________, the firm _______________.

$2.00

I'MaPizzaCo. produces and sells specialty pizzas. Last year, it produced 8,000 mushroom, sausage and spinach pizzas and sold each one for $8. To produce these 8,000 specialty pizzas, the company incurred variable costs of $24,000 and a total cost of $40,000. I'MaPizzaCo's average fixed cost to produce 8,000 specialty pizzas was

decreasing returns to scale

If a firm is experiencing _____________________, then as the quantity of output rises, the average cost of production rises.

variable costs

If a paper mill shuts down its operations for three months so that it produces nothing, its __________________ will be reduced to zero?

a monopoly

In economics, a firm that faces no competitors is referred to as _________________.

increasing returns to scale

In microeconomics, the term _____________________ is synonymous with economies of scale.

the quantity of output

In order to determine the average variable cost, the firm's variable costs are divided by _______________________.

physical space for the gallery

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?

producing a marginal unit is increasing average costs overall

Refer to the graph shown above. Based on the information illustrated in the graph, which of the following is correct?

upward-sloping; more costly to produce

The marginal cost curve is generally ______________, because diminishing marginal returns implies that additional units are ________________________.

A=42, E=12

The table below sets out cost information for the production of volley balls. Some values are missing. Which of the following statements is correct?

expanding all inputs does not change the average cost of production

The term "constant returns to scale" describes a situation where

marginal cost

The term _____________ is used to describe the additional cost of producing one more unit.

economies of scale

The term __________________ describes a situation where the quantity of output rises, but the average cost of production falls.

economies of scale; a larger factory can produce at a lower average cost than a smaller company

When __________________ exist, doubling of all inputs will result in more than doubling output, which means __________________________________________.

average cost

____________ tells a firm whether it can earn profits given the price in the market.

variable costs

______________ include all of the costs of production that increase with the quantity produced.