Microeconomics- Homework 7/8

Lakukan tugas rumah & ujian kamu dengan baik sekarang menggunakan Quizwiz!

Does the law of diminishing returns apply in the long run?

No

Average Revenue (AR)

Total revenue / quantity

Variable cost

a cost that changes as output changes

Which of the following is most likely to a variable cost for a business​ firm?

costs of shipping products

Which of the following is most likely to be a fixed cost for a​ farmer?

insurance premiums on property

The marginal cost curve intersects both the average variable cost and the average total cost curves at their __________ points.

minimum

MC

change in TC/change in Q

ATC

AVC + AFC

AVC

VC/Q

How are implicit costs different from explicit​ costs?

An explicit cost is a cost that involves spending​ money, while an implicit cost is a nonmonetary cost.

When are firms likely to be price​ takers?

A firm is likely to be a price taker when it sells a product that is exactly the same as every other firm or when it represents a small fraction of the total market.

What is a price​ taker?

A price taker is a firm that is unable to affect the market price.

AFC

FC/Q

What is the law of diminishing returns?

adding more of a variable input to the same amount of a fixed input will eventually cause the marginal product of the variable input to decline.

Marginal Revenue (MR)

the change in total revenue / change in quantity

What are implicit​ costs?

An implicit cost is a non monetary opportunity cost

Perfectly competitive markets A market that meets the following​ conditions:

1. Many buyers and sellers. Each individual buyer and seller is small relative to the entire​ market, and, as a​ result, cannot affect the market price. 2. All firms sell identical products. There can be no verifiable difference between the goods and services sold under perfect competition. 3. There are no barriers to entry into the market.

What is the relationship between a perfectly competitive​ firm's marginal cost curve and its supply​ curve?

A​ firm's marginal cost curve is equal to its supply curve for prices above average variable cost.

Which of the following statements is correct?

Economic profit takes into account all costs involved in producing a product.

What are the three conditions for a market to be perfectly​ competitive?

For a market to be perfectly​ competitive, there must be many buyers and​ sellers, with all firms selling identical​ products, and no barriers to new firms entering the market.

The marginal cost of production shows the change in a​ firm's total cost from producing one more unit of a good or service. What is the shape of the marginal cost​ curve?

Graphically, the marginal cost curve is a U​ shape, initially falling when the marginal product of labor is rising and then eventually rising when the marginal product of labor is falling.

Explain why it is true that for a firm in a perfectly competitive market that P​ = MR​ = AR.

In a perfectly competitive​ market, P​ = MR​ = AR because firms can sell as much output as they want at the market price.

How are prices determined in perfectly competitive markets​?

In perfectly competitive​ markets, prices are determined by the interaction of market demand and supply because firms and consumers are price takers.

What is the difference between the short run and the long​ run?

In the short​ run, at least one of a​ firm's inputs is​ fixed, while in the long​ run, a firm is able to vary all its inputs and adopt new technology.

Is the amount of time that separates the short run from the long run the same for every​ firm?

No

Total Revenue (TR)

Price x Quantity

ATC

TC/Q

Explain why the marginal cost curve intersects the average total cost curve at the level of output where average total cost is at a minimum.

The marginal cost curve intersects the average total cost curve at the level of output where the average total cost is a minimum because when the marginal cost of the last unit produced is below the​ average, it pulls the average​ down, and when the marginal cost is above the​ averge, it pulls the average up.

How is the market supply curve derived from the supply curves of individual​ firms?

The market supply curve is derived by horizontally adding the individual​ firms' supply curves.

Marginal product and marginal cost

When the marginal product of labor is​rising, the marginal cost of production is falling. When the marginal product of labor is​ falling, the marginal cost of production is rising.

Fixed costs

are costs that remain constant as output changes

Long run costs are U−shaped because

economies and diseconomies of scale


Set pelajaran terkait

PN NCLEX 6th Edition Hematological

View Set

Stretches For The Upper Extremity

View Set

Chemistry B-Energy-Assignment/Quiz

View Set

The Iroquois Creation Myth: "The World on Turtle's Back"

View Set

Chapter 59 Assessment and Management of Patients With Male Reproductive Disorders

View Set