E2

Rent paid for a building is_____________ in an accountant's calculations and Raw materials are ____________

Both Included

​______ are features of a​ firm's technology that lead to falling​ long-run average cost as output increases that arise because of​ _______.

Economies of​ scale; greater specialization of both labor and capital

The key assumption about the marginal rate of substitution is that it is​ _______.

Its diminishing as you move down the curve

An indifference curve is bowed toward the origin because the more of good x that you consume the​ ______ .

Less of y to get more of x

For a normal​ good, the income effect​ _______.

Reinforces the substitution effect

If marginal utility falls than total utility______________

Rises at a slower rate

The key distinction between technological efficiency and economic efficiency is that technological efficiency​ _______ and economic efficiency​ _______.

Tech Efficiency concerns the quantity of inputs used in production for a given level of​ output; Economic efficiency concerns the value of the inputs used

When the price of a normal good​ falls, there is​ ______.

a movement down along the demand curve and an increase in the quantity demanded

An indifference curve shows​ _______

combinations of goods among which a consumer is​ indifferent;

Diminishing returns to capital​ _______ occur as the quantity of capital increases because for a given quantity of​ _______ incremental amounts of output.

do; labor each additional unit of capital will result in smaller

As the labor employed​ increases, marginal product of labor initially​ ______. As the labor employed​ increases, the average product of labor​ initially______.

increases and eventually​ decreases; increases and eventually decreases

An indifference curves slopes downward because​ _______.

it shows that when a person gives up some of good x they must increase their consumption of good y to remain indifferent

A preference map shows that a person prefers combinations​ _______.

on higher indifference curves to combinations on lower indifference curves

When the price of the good measured on the x​-axis falls​, the relative price of the good measured on the x​-axis ​_______ and the budget line​ _______.

price Falls and the budget line becomes less steep

A​ firm's production function shows the relationship between the maximum output attainable and the​ ______

quantities of both labor and capital

Measures of concentration give a good indication of the degree of competition in a market when​ _______.

the market is​ national, and barriers to entry are clearly identifiable and not overstated or understated

Along the total product​ curve, output increases as​ _______.

the quantity of labor increases and the plant size remains constant