Econ Chap. 11
When APL is increacing
MPL is greater than APL
Which of the following is true?
TC = explicit costs + implicit costs
What happens to the difference between average variable cost and average total cost as the level of output increases?
The difference decreases
If the number of people in a publishing company does not go up or down with the quantity of books it publishes, then how should we categorize the salaries and benefits paid to these employees?
They are part of fixed cost
Average variable cost (AVC) IS
Total variable cost / level of output produced (also Q)
The vertical distance between the total cost and the total variable cost curves is and reflects .
constant; total fixed cost
When MC is less than ATC, ATC must be
decreasing
Economies of scale
happens when the firm's long-run average total cost decreases as output increases, is represented by the downward-sloping part of the long-run average cost curve
The law of diminishing returns applies
in the short run
A positive technological change causes , while a negative technological change causes .
more output to be produced from the same inputs; less output to be produced from same inputs
When average variable cost curve is decreasing, marginal cost curve
must be below the average variable cost curve
Which of the following is known as the highest-valued alternative that must be given up in order to engage in an activity?
opportunity cost
The production function shows
the relationship between the inputs used by the firm and the maximum output it can produce
The short run is a period of time , while the long run is a period of time .
where at least one input is fixed; where all inputs are variable
The following cost measures reach their minimum points when they are equal to the value of MC except one. Which cost measure is the exception?
average fixed cost
Minimum efficient scale is the level of output at which
all economies of scale are exhausted
As output increases, the vertical distance between ATC and AVC curve gets and equals .
smaller; Average fixed cost
Total fixed cost
stays the same regardless of the level of output
Economies of scale are represented by , while diseconomies of scale are represented by .
the downward sloping part of the long run average cost curve; the upward sloping part of the long run average cost curve
which of the following terms refers to the lowest cost at which a firm is able to produce a given level of output i the long run, when no inputs are fixed?
the long-run average cost curve
A long-run average cost curve has
the lowest cost of producing any level of output
Marginal rate of technical substitution is
the rate at which firms are able to substitute one input for another while keeping the level of output constant