ch 7- Econ test 2

in order to determine ______________, the firms total cost bust be divided by the quantity of its outputs

average cost

________________ tells a firm whether it can earn profits given the price in the market.

average costs

I'MaGadgetCo. produces and sells widgets. Last year, it produced 9,000 widgets and sold each one for $8. To produce the 9,000 widgets, the company incurred variable costs of $27,000 and a total cost of $36,000. I'MaGadgetCo's average fixed cost to produce 9,000 widgets was

$1.00

I'MaPizzaCo. produces and sells specialty pizzas. Last year, it produced 8,000 mushroom, sausage and spinach pizzas and sold each one for $8. To produce these 8,000 specialty pizzas, the company incurred variable costs of $24,000 and a total cost of $40,000. I'MaPizzaCo's average fixed cost to produce 8,000 specialty pizzas was

$2.00

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

_____________ tells a firm whether it can earn profits given the price in the market

average cost

in economics, a firm that faces no competitors is referred to as

a monopoly

In order to reduce the harmful affects of recession and carbon emissions, the government provided tax incentives for manufacturing firm's to ___________________ that provide alternative, more efficient methods of combining inputs to produce output.

acquire energy efficient production technology

_______________ helps to explain why every economy as it develops has an increase proportion of its population living in urban area.

agglomeration factors

The graph above illustrates the total cost function for GoodieCookie Co. How are the company's fixed costs represented in this graph?

as the point where the total cost curve touches the vertical axis

The _____________________ curve will always lie below the curve for average cost because average cost includes _____________ in the numerator of the calculation.

average variable cost; fixed cost

the ____________ curve will always lie below the curve for average cost because average cost includes _____________ in the numerator of the calculation

average variable cost; fixed cost

a situation where the level of of output, scale, and average cost are all rising is called

both a and b decreasing returns to scale and diseconomies of scale

a situation known as_______________ occurs when all production inputs are allowed to expand, but the expansion does not result in much of a change in the average cost of production

constant returns to scale

the _____________ of all firms can be broken down into some common underlying patterns

cost structure

which of the following falls outside of the classification of business expenses that fall into category of fixed costs?

costs incurred on the act of producing

which of the following falls outside of the classification of business expenditures that fall into the category of variable costs?

costs of research and development

_______________ occurs when the marginal gain in output diminishes as each addition unit of input is added.

diminishing marginal returns

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 cost into two categories, fixed cost that can't be changed in the short run and variable cost that can be

according to the definition of profit, if a profit-maximizing firm will always attempt to produce its desired level of output at the lowest possible cost, then it will

do so regardless of what type of completion exists in a market

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

economics of scale

when _____________ exists, doubling of all inputs will result in more than doubling output, which means

economics of scale, a larger company can produce at a lower average cost than a smaller company

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

either total cost or variable cost

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

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

a firm's ________________ consists of expenditures that must be made before production starts, that typically over the short run, ______________ regardless of the level of production

fixed cost, 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 productio

fixed costs; do not change

in microeconomics the term ________________ is synonymous with economic of scale

increasing returns to scale

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

is subtracting from profit

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

marginal cost

________________________ arises where many firms are competing in a market to sell similar but differentiated products.

monopolistic competition

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

why would labor be treated as a variable cost?

producing a larger quantity of a good or service requires more workers

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

short run, cannot alter them

Which of the following should typically be ignored because spending has already been made and cannot be changed?

sunk cost

in order to determine the average variable cost , the firms variable costs are divided by

the quantity of output

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

total cost

whatever the firms quantity of production, _________ must exceed total costs if it is to earn profit

total revenue

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 cost

______________ include all the costs of production that increase with the quantity produced

variable costs