micro chapter 7 & 8 review
total revenue
whatever the firm's quantity of production --- must exceed total costs if it is to earn a profit
marginal revenue
--- refers to the additional revenue gained from selling one more unit
fixed costs; do not change,
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.
constant returns to scale
A situation known as _____________________ occurs when all production inputs are allowed to expand, but that expansion does not result in much of a change in the average cost of production
marginal product
Additional output of one more worker
economies of scale
Describes a situation where the quantity of output rises, but the average cost of production falls
variable inputs
Factors of production that a firm can easily increase or decrease in a short period of time
diseconomies of scale or decreasing returns of scale
Firm or a factory can grow so large that it becomes very difficult to manage or run efficiently. What happens in this situation
perfect competition
Firms operating in a market situation that creates ---, sell their product in a market with other firms who produce identical or extremely similar products
average costs
If the price that a firm charges is lower than its --- of production, the firm will suffer losses
how much to produce
In a free market economy, firms operating in a perfectly competitive industry are said to have only one major choice to make. What is that choice
Monopoly
In economics, a firm that faces no competitors is referred to as
quantity of output
In order to determine the average variable cost, the firms variable are divided by
quantity
In order to determine the average variable cost, the firms variable costs are divided by
increasing returns to scale
Microeconomics, the term --- is synonymous with economies of scale
price takers
Perfectly competitive market, a firm must take the prevailing market prices. The firm is referred to as
shutdown point
Period of time during which all factors of production are variable- long run If a firm's revenues don't cover its average variable costs, then that firm has reached its
short run
The period of time during which at least some factors of production are fixed
economies of scale
The term __________________ describes a situation where the quantity of output rises, but the average cost of production falls
identical products many buyers/sellers all relevant info available easy entry and exit of market 5th element- price takers
What are the 4 criteria for perfect competition
existing firms may expand their operations, firms may move along their LRAC curves to new outputs there may be pressure on the market price to fall, new firms may enter the industry
What happens in a perfectly competitive industry when economic profit is greater than zero
total revenue
Whatever the firm's quantity of production, _____________ must exceed total costs if it is to earn a profit
producing larger quantities of a good or service generally requires more workers
Why would labor be treated as a variable cost?
Total revenue
_____________ is calculated by taking the quantity of everything that is sold and multiplying it by the sale price
Variable costs
______________ include all of the costs of production that increase with the quantity produced
fixed inputs
factors of production that cannot be easily increased or decreased in a short period of time
decreasing returns to scale or diseconomies of scale
if a firm experiencing ---, then as the quantity of output rises, the average cost of production rises
total revenue
is calculated by taking the quantity of everything that is sold and multiplying it by the sale price
constant returns to scale
If a firm is experiencing ---, then as the quantity of output rises, the average cost of production rises
allocative efficiency
If a firm is producing so that the point chosen along the production possibility frontier is socially preferred, then that fir is said to have reached its
variable costs
If a paper mill shuts down its operations for three months so that it produces nothing, its --- will be reduced to zero
divide total costs into two categories: fixed costs that can't be changed in the short run and variable costs that can be
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?
profits equal $40
If the firm produces 5 units that it sells for $39.00 each, what will its profits or losses equal?
fixed costs
firms --- consist of expenditures that must be made before production starts
average cost
in order to determine --, the firms total costs must be divided by the quantity of its output
the quantity of output
in order to determine the average variable cost, the firm's variable costs are divided by _______________________.
variable costs
include all of the costs of production that increase with the quantity produced