Econ Production Possibilites

Fixed costs are important because, at least in the ___________, the firm _______________

short run, cannot alter them

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

economies of scale

Why would labor be treated as a variable cost?

producing larger quantities of a good or service generally requires more workers

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

expanding all inputs does not change the cost of production

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

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

variable costs

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

diminishing marginal returns

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

Average cost

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

The quantity of output

If a firm is experiencing _____________________, then as the quantity of output rises, the average cost of production rises.

decreasing returns to scale

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

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

total costs

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

variable costs

In order to calculate marginal cost, the change in ______________ is divided by the amount of change in quantity.

either total cost or variable cost

In microeconomics, the term _____________________ is synonymous with economies of scale.

increasing returns to scale

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

marginal cost