ECON

Marginal cost is equal to average cost when

Average total cost is at its minimum

The cost of producing the typical unit of output is the firm's

Average Total Cost

The marginal product of labor is equal to the

Increase in output obtained from a one unit increase in labor

The amount by which total cost rises when the firm produces one additional unit of output is called

Marginal cost

Diminishing marginal product suggests that

Marginal cost is upward sloping

Economists normally assume that the goal of a firm is to

Maximize its profit

Fixed costs are important because, at least in the ____, the firm _____.

Short run; cannot alter them

Which of these assumptions is often realistic for a firm in the short run?

The firm can vary the number of workers it employs but not the size of its factory.

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

Total costs

The amount of money that a firm receives from the sale of its output is called

Total revenue

Economic profit is equal to

Total revenue minus the opportunity cost of producing goods and services.

Profit is defined as

Total revenue minus total cost

It a firm produces nothing, which of the following cost will be zero?

Variable Cost

When marginal cost is less than average total cost,

average total cost is falling

One would expect to observe diminishing marginal product labor when

crowded office space reduces the productivity of new workers

Which of the following costs do not vary with the amount of output a firm produces?

fixed costs

In the long run,

inputs that were fixed in the short run become variable

Suppose Jan started up a small lemonade stand business last month. Variable costs for Jan's lemonade stand now include the cost of

lemons and sugar

The efficient scale of the firm is the quantity of output that

minimizes average total cost

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

For a firm, the production function represents the relationship between

quantity of inputs and quantity of output

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