Microeconomics Module 6

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

Total revenue

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

Variable costs

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

it allows all factors of production to change.

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

$2.00 (40K-24K=16K) to get (16K/8K=2)

Mindy's company manufactures rubber balls used by elementary schools for playground activities. The table below sets out her firm's production cost information. Some values are missing. Which of the following statements is correct?

B = 20; E = 45

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

A = 42, E = 12

If the firm produces 5 units that it sells for $39.00 each, what will its profits or losses equal?

Profits equal $40

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

the quantity of output

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

A situation where the average costs are rising in the long run is called

diseconomies of scale

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

expanding all inputs does not change the average cost of production.

The graph above illustrates the electricity market. Consider market competition between firms where price is based on AR and select the most appropriate answer.

this market is imperfectly competitive with excess profits possible in the short-run

If the firm produces 5 units that it sells at a price of $30.00 each, what will its profits or losses equal?

Losses equal $5

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

economies of scale