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