microeconomics 7

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

Diminishing marginal returns

The _____________________ curve will always lie below the curve for average cost because average cost includes _____________ in the numerator of the calculation.

average variable cost; fixed costs

If a solar panel manufacturer wants to look at its total costs of production in the short run, which of the following would provide a useful starting point?

divide total costs into two categories: fixed costs that can't be changed in the short run and variable costs that can be

In order to calculate marginal cost, the change in ______________ is divided by the amount of change in quantity.

either total cost or variable cost

If the firm produces 5 units (quantity) that it sells at a price of $20.00 each, what will its profits or losses equal?

losses equal $55

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

marginal cost

Why would labor be treated as a variable cost?

producing larger quantities of a good or service generally requires more workers

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

total revenue

In order to reduce the harmful affects of recession and carbon emissions, the government provided tax incentives for manufacturing firm's to ___________________ that provide alternative, more efficient methods of combining inputs to produce output.

acquire energy efficient production technologies

Which of the following falls outside of the classification of business expenditures that fall into the category of variable costs?

costs of research and development

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

a monopoly

Which of the following falls outside of the classification of business expenses that fall into the category of fixed costs?

costs incurred in the act of producing

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

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

Economies of scale may arise from all but one of the following. Which one is it?

government economic subsidies protect firms from competition to avoid losses

The ______________ of all firms can be broken down into some common underlying patterns.

cost structure

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

total revenue

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

variable costs

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

the quantity of output

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

Monopolistic competition

___________ include all spending on labor, machinery, tools, and supplies purchased from other firms.

Total costs

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

Variable costs

A situation known as _____________________ occurs when all production inputs are allowed to expand, but that expansion does not result in much of a change in the average cost of production.

constant returns to scale

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,

Which of the following should typically be ignored because spending has already been made and cannot be changed?

sunk costs

The economies-of-scale curve is a long-run average cost curve, because

it allows all factors of production to change.

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

short run; cannot alter them

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

average cost

I'MABigCorp. produces and sells kitchen wares. Last year, it produced 7,000 can openers and sold each one for $6. To produce the 7,000 can openers, the company incurred variable costs of $28,000 and a total cost of $45,000. I'MABIGCorp.'s average fixed cost to produce the 7,000 can openers was

$2.43

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

decreasing returns to scale

In microeconomics, the term ___________________ is synonymous with decreasing returns of scale.

diseconomies of scale

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

economies of scale

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

increasing returns to scale

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?

physical space for the gallery