Learnsmart 12

variable costs

depend on the quantity of output produced.

--- costs are what you give up in order to get something.

implicit

The production function shows the relationship between the quantity of --- and the quantity of outputs.

inputs

A firm's variable cost is zero when

it stops production.

The increase in the number of units of a product that can be produced by hiring an additional employee is called the --- product of that employee.

marginal

When the --- product crosses the product curve, the average ---product curve starts to decrease.

marginal, average

When economists think about a firm's costs, they are thinking about

opportunity costs.

--- (one word) is the difference between total revenue and total cost.

profit

Suppose Drink Well produces flavored water in a rented space using their private well, purchased bottles, and hired hourly labor. They buy advertising services from a marketing company for a fee based on sales. The owners used $100,000 of their savings to start the company.Explicit costs include

purchased bottles, hired hourly labor, and advertising services.

Marginal product is represented by the --- of the total production curve.

slope

A firm's total cost is the

sum of all of its fixed and variable costs.

In business, people frequently say, "It's all about the bottom line." What they mean by this is

that making a profit is the central goal of a business.

The amount that a firm pays for all of the inputs that go into producing goods and services is the

total cost.

The quantity sold multiplied by the price paid per unit is

total revenue.

Economic profit is smaller than accounting profit because it includes explicit and implicit costs.

true

The behavior of most firms can be explained by

a profit motive.

Because economic profit includes both explicit and implicit costs,

accounting profit is larger than economic profit.

Total revenue minus explicit costs is

accounting profit.

Suppose Event Photo Services takes photographs at private events with cameras they purchased. They process the photos in a rented space and hire hourly labor to arrange shoots and produce the finished photo packages. They buy advertising services from a marketing company for a flat annual fee.Their fixed costs include

advertising, rent, and cameras.

Economic profit is total revenue minus

all explicit and implicit costs.

Suppose Jump High produces 4,000 trampolines that sell for $250 each. The firm's total revenue is $--.

1000000

--- costs include both fixed and variable costs.

Explicit

Explicit costs are

costs that include just about everything we typically think of as a cost. costs that require a firm to spend money.

Average product of labor is the units of --- produced per worker.

output

The relationship between the quantity of inputs and the quantity of outputs is the --- function.

production

When people refer to the bottom line, they are referring to the company's --- which is shown on the bottom line in a company's income statement.

profit

When we ask, "What are a firm's wants?", the answer is that it wants to maximize its ---.

profit

--- costs depend on the quantity of output produced.

variable

Profit is the --- between total revenue and total cost.

difference

Implicit costs are costs that

do not require a firm to spend money or take on obligations.

Fixed costs are those that

don't depend on the quantity of output produced.

In general, --- profit is smaller than --- profit.

economic, accounting

Costs that require a firm to spend money are --- costs.

explicit

Rent on a building, employee salaries, materials, and machines are examples of --- costs.

explicit

A firm's opportunity cost of operations has two components. They are

explicit and implicit costs.

---costs include just about everything we typically think of as a cost. ---costs represent forgone opportunities.

explicit, implicit

Costs that don't change as output increases or decreases are called

fixed costs.

If you use your saved money as your start-up capital, there is an implicit cost because you

give up interest you could have earned on the money in a savings account.

One cost faced by nearly all firms is the --- cost of the money invested in starting up the business.

implicit

The marginal of an employee is the

increase in the units of a product that can be produced by hiring an another employee.

Suppose Jump High produces trampolines in a rented space using purchased frames and materials. They also hire labor and buy advertising services from a marketing company for a flat annual fee.Their variable costs include

labor and materials.

Costs that change with the quantity of output produced are called --- costs, whereas those that do not change with the quantity of output produced are called ---costs.

variable, fixed

Because marginal product is represented by the slope of the total production curve,

when diminishing returns take effect, the total production curve levels out.