Micro study guide Chp 7

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

average 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; do not change

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.

If the firm sells 5 units at a price of $30 each, then the marginal unit produced

is subtracting from profits

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

upward-sloping; more costly to produce

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

variable costs

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

Diminishing marginal returns

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

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

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

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

. the quantity of output

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

_____________ 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

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

a monopoly

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

The future of cities in the United States and in other countries will be determined by their ability to benefit from the _________________ and to minimize or counterbalance the ______________________.

economies of agglomeration; corresponding diseconomies

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

economies of scale

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

marginal cost

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

the transition point between where MC is pulling down and pulling up AC always occurs at the minimum point of the AC curve