Micro Chapter 9
There is a ______ relationship between marginal cost and marginal product.
inverse
When total product is decreasing, marginal product ______.
is negative
average product
labor productivity, output per unit of labor input
in a natural monopoly, long run costs are _______ when only one firm produces one product.
minimized
The size of the factory, the amount of machinery and equipment, and other capital resources define its....?
plant capacity
When total product is increasing at an increasing rate, marginal product is:
rising
Economies of Scale factors
-Labor specialization -Managerial specialization -Efficient capital, better equiptment -Design, development, and advertising
Diseconomies of scale characteristics
-control and coordination problems -Communication problems -worker allienation -shirking (working getting away with not being productive)
short run
-the period of time during which at least one of a firm's inputs is fixed -period too brief to alter its plant capacity -some variable inputs; can be changes
long run
-the time period in which all inputs can be varied -firms can adjust plant size as well as enter and exit industry
Which of the following is true of average fixed cost when output increases?
Average fixed cost declines as output increases.
Which of the following is true where the marginal product curve intersects the average product curve?
Average product is at its maximum.
Marginal cost (MC)
Chang in TC / Change in Q Change in total cost / Change in Average Quantity
Total Fixed Costs (TFC)
Costs that do not vary with output.
Total Variable Costs (TVC)
Costs that do vary with output. (typically up sloping/horizontal)
A firm's ______ costs are the explicit and implicit costs of all the resources it has used .
Economic
There is NO Average ______ Cost in the Long run.
Fixed
minimum efficient scale (MES)
Lowest level of output at which long run average costs are minimized.
Average product curve can never be ______.
Negative
The Minimum Efficient Scale can determine the _______ of an industry.
Structure
Total Cost (TC)
Sum of TFC and TVC. Total cost = Total fixed cost +total variable cost
Average Total Costs (ATC)
TC / Q or AFC + AVC Total cost / Quantity or Average fixed cost / Average variable cost
Average Fixed Cost (AFC)
TFC / Q Total Fixed Cost / Quantity
Average Variable Cost (AVC)
TVC / Q Total Variable Cost/ Quantity
spreading overhead
The process of dividing total fixed costs by more units of output. Average fixed cost declines as quantity rises.
accounting profit
The total revenue of a firm less its explicit costs; the profit (or net income) that appears on accounting statements and that is reported to the government for tax purposes.
The AVC curve is ___ shaped.
U
normal profit
Value of entrepreneur's talent in the next best entrepreneurial activity the payment made by a firm to obtain and retain entrepreneurial ability; the minimum income entrepreneurial ability must receive to induce it to perform entrepreneurial functions for a firm
All costs in the long run are______.
Variable
If the total product is at its maximum, the marginal product is _____.
Zero
Marginal product formula
change in total product/change total labor input
The short fun and long run are _____periiods, not speciific amounts of time.
conceptual
For any average product to remain constant, marginal product must be ______ to the average products.
equal
A planning too used to analys
explicit
economic costs =
explicit costs + implicit costs
For any average product to increase, marginal product must be ______ than average product.
greater
For any average product to decline, marginal product must be ______ than average product.
less
Economies of scale explain the downward-sloping part of the ______ curve.
long-run average-total-cost
Average product declines when ______.
marginal product is less than average product
When total product is increasing, but at a decreasing rate, marginal product is:
positive, but falling
marginal product
the extra output or added product associated with adding ONE unit of a resource.
implicit costs
the monetary income a firm sacrifices when it uses a resource it owns rather than supplying the resource in the market; equal to what the resource could have earned in the best-paying alternative employment; includes a normal profit
explicit costs
the monetary payment a firm must make to an outsider to obtain a resource
law of diminishing returns
the principle that, at some point, adding more of a variable input, such as labor, to the same amount of a fixed input, such as capital, will cause the marginal product of the variable input to decline
economies of scale
the property whereby long-run average total cost falls as the quantity of output increases
diseconomies of scale
the property whereby long-run average total cost rises as the quantity of output increases
constant returns to scale
the property whereby long-run average total cost stays the same as the quantity of output changes
economic profits
the return flowing to those who provide the economy with the economic resource of entrepreneurial ability; the total revenue of a firm less its economic costs.
plant capacity
the size of the building and amount of capital equipment
total product
the total quantity or total output of a particular good or service produced
economic cost
the value of all resources used to produce a good or service; opportunity cost
At the point on a graph where total product (Q) is zero, total cost is equal to ______.
total fixed costs
average product formula
total product/units of labor total units of output/ total units of input
economic profit =
total revenue - explicit costs - implicit costs
When viewed on a graph, total variable cost is measured ______ at each level of output from the X axis. Multiple choice question.
vertically
When total product is at its maximum, marginal product is ____.
zero