producer section 2

Total cost divided by the amount of output produced is equal to:

average total cost.

Total cost per unit is equal to:

average total cost.

To determine the true cost associated with the production of goods or services, ______

costs should be taken into account.

The average fixed cost curve:

decreases for all levels of output.

What is the total cost of production associated with the 3nd raincoat

$62.50

What is the appropriate label for Curve Y in the nearby graph?

Average Product

(Average fixed cost + average variable cost) =

Average total cost

Which of the following is true of economic costs?

Economic costs are defined as the sum of explicit and implicit costs.

Which of the following is a way that firms can avoid paying fixed costs in the short run?

Firms cannot avoid fixed costs in the short run.

What is the appropriate label for Curve Z in the nearby graph?

Marginal Product

The amount of output produced per unit of a resource employed is the

averAge product

In addition to total cost, it is useful to calculate _____ cost because it can be compared directly to the price.

average

Total variable cost divided by the amount of output produced is equal to:

average variable cost.

Variable cost per unit of output produced is:

average variable cost.

Total product divided by the number of units of a resource employed gives the

avg. product of the resource

The variable cost curve, at each output level, falls:

below the total cost curve by the amount of the fixed cost curve.

Explicit costs are also known as _____ costs

direct

Total revenue minus the explicit and implicit costs of production is _____ profit.

economic

positive _____ profits encourage more firms to enter the market to produce goods and services.

economic

Total revenue minus the total _____ costs of production is accounting profit.

explicit

a firm incurs ______ costs when it pays for a factor of production at the same time that is uses it, whereas ____ costs are the costs associated with a firms use of resources that it owns

explicit implicit

Zero accounting profit means that the value of economic profit is

negative

______ economic profits encourage firms to exit the market.

negative

Costs that do not change with the amount of _____ produced are fixed costs.

output

The fixed cost curve is:

perfectly horizontal, while total variable cost curve is upward sloping.

when the margina product increanse the marginal. ________ of production declines

product

total _____ equals price times quantity.

revenue

Economic profit consists of _____; accounting profit consists of _____.

revenue minus implicit and explicit costs; revenue minus explicit costs

marginal cost

the additional cost associated with one more unit of an activity. for production it is the change in total cost due to the production of one more unit of output extra or additional cost associated with the production of an additional unit of output.

A person who has been managing a dry cleaning store for $30,000 per year decides to open his own dry cleaning store. The expenses are $35,000 for salaries (excluding the owner's) $10,000 for supplies, $8,000 for rent, $2,000 for utilities, and $5,000 for interest on a bank loan. The implicit costs include:

the owner's forgone salary.

Any time you give up the opportunity to use the resource for something else

there is an opportunity cost

Being able to calculate total product average product and marginal product is important:

to operate efficiently and maximize profits.2

being able to _____ product average product and marginal product is important to operate efficiently and maximize profits.

total

Total cost equals:

total fixed cost plus total variable cost.

The total amount of output produced with a given amount of resources is known as:

total product.

Costs that change with the amount of output produced are

variable

Costs that change with the amount of output produced are _____ costs.

variable

Suppose a snowboard manufacturer increases its output by 1 snowboard per day. As a result, the total cost of producing snowboards each day rises from $100 to $110. The marginal cost of producing an extra snowboard is $

10

A person who has been managing a dry cleaning store for $30,000 per year decides to open her own dry cleaning store. The expenses are $35,000 for salaries (excluding the owner's), $10,000 for supplies, $8,000 for rent, $2,000 for utilities, and $5,000 for interest on a bank loan. The revenues of the store during the first year of operation are $100,000. The total economic profit is

1000

What is the average product when there are two workers?

125 computer chips

The information below shows the relationship between the number of workers and the amount of computer chips they can produce. What is the marginal product of the second worker?

150 computer chips

Suppose a snowboard manufacturer increases it output by 1 snowboard per day. As a result, the total cost of producing snowboards each day rises from $120 to $145. The marginal cost of producing an extra snowboard is $

25

Total revenue minus the explicit cost of production is _____ profit.

accounting

Marginal product is the:

additional output produced as a result of utilizing one more unit of a variable resource.

Average product is the:

amount of output produced per unit of a resource employed.

The short run is a period of time in which:

at least one input of production is fixed.

Average total cost equals:

average fixed cost plus average variable cost.

The vertical distance between the average variable cost and average total cost curves gets smaller as more output is produced because this distance is equal to the:

average fixed cost which declines as output increases.

The fixed cost per unit is equal to:

average fixed cost.

Total fixed cost divided by the amount of output produced is equal to:

average fixed cost.

Monetary payments made by individuals, firms ,and governments for the use of others' land, labor, capital, and entrepreneurial ability are _____ costs.

explicit

The average fixed cost always declines with additional output while the average ____ and average _____ costs decline and then increase.

fexed variable

The average total cost curve is:

greater than the average variable cost curve for all levels of output.

The opportunity costs of using owned resources are ____ costs

implicit

Total revenue minus the total _____ and total _____ costs of production is economic profit.

implicit explicit

_______ is an important factor in determining the true cost of an economic activity such as the production of goods and services.

implicit cost

Costs for which no monetary payment is explicitly made are

implicit costs

_______ marginal returns is a characteristic of production whereby the marginal product of the next unit of a variable resource utilized is greater than that of the previous variable resource.

increasing

The average product curve is:

increasing before reaching its peak, then decreasing.

a period of time in which at least one ____ of production is fixed is known as the short run.

input

If a company decides to produce zero units of output,:

it still has to pay fixed costs of production.

Decreasing marginal returns are a characteristic of production whereby the marginal product of the next unit of a variable resource utilized is _____ than that of the previous variable resource.

less

increasing ______ eturns is a characteristic of production whereby the marginal product of the next unit of a variable resource utilized is greater than that of the previous variable resource.

marginal

The extra or additional cost associated with the production of an additional unit of output is the

marginal cost

The marginal cost curve shows the relationship between:

marginal cost and output.

A profit-maximizing firm should produce a level of output where:

marginal revenue equals marginal cost.

Costs that increase as production increases and decrease as production decreases are

variable costs

Total _____ costs change with output whereas total _____ costs do not.

variable; fixed