Econ Chap. 11

When APL is increacing

MPL is greater than APL

Which of the following is true?

TC = explicit costs + implicit costs

What happens to the difference between average variable cost and average total cost as the level of output increases?

The difference decreases

If the number of people in a publishing company does not go up or down with the quantity of books it publishes, then how should we categorize the salaries and benefits paid to these employees?

They are part of fixed cost

Average variable cost (AVC) IS

Total variable cost / level of output produced (also Q)

The vertical distance between the total cost and the total variable cost curves is and reflects .

constant; total fixed cost

When MC is less than ATC, ATC must be

decreasing

Economies of scale

happens when the firm's long-run average total cost decreases as output increases, is represented by the downward-sloping part of the long-run average cost curve

The law of diminishing returns applies

in the short run

A positive technological change causes , while a negative technological change causes .

more output to be produced from the same inputs; less output to be produced from same inputs

When average variable cost curve is decreasing, marginal cost curve

must be below the average variable cost curve

Which of the following is known as the highest-valued alternative that must be given up in order to engage in an activity?

opportunity cost

The production function shows

the relationship between the inputs used by the firm and the maximum output it can produce

The short run is a period of time , while the long run is a period of time .

where at least one input is fixed; where all inputs are variable

The following cost measures reach their minimum points when they are equal to the value of MC except one. Which cost measure is the exception?

average fixed cost

Minimum efficient scale is the level of output at which

all economies of scale are exhausted

As output increases, the vertical distance between ATC and AVC curve gets and equals .

smaller; Average fixed cost

Total fixed cost

stays the same regardless of the level of output

Economies of scale are represented by , while diseconomies of scale are represented by .

the downward sloping part of the long run average cost curve; the upward sloping part of the long run average cost curve

which of the following terms refers to the lowest cost at which a firm is able to produce a given level of output i the long run, when no inputs are fixed?

the long-run average cost curve

A long-run average cost curve has

the lowest cost of producing any level of output

Marginal rate of technical substitution is

the rate at which firms are able to substitute one input for another while keeping the level of output constant