Production

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

Marginal

____ economic profits encourage firms to exit the market

Negative

a period of time in which at least one input of production is fixed is known as the _____ run

Short

explicit costs are also known as ____ costs

accounting

average product is the

amount of output produced per unit of a resource employed

in addition to total cost, it is useful to calculate average cost becuase

average cost can be compared directly to the price and average cost numbers are more useable for managing.

the vertical distance between the average variable cost and the average total cost curves is equal to the

average fixed cost

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

average variable cost

total revenue minus the ___ and ____ costs of production is economic product

explicit and implicit

when the marginal product increases, the marginal cost of production

falls

marginal values drive average values because

if the marginal value is above or below the average value, it will pull the average up or push it down.

to determine the true cost associated with the production of goods or services, _____ costs should be taken into account

implicit

the shape of the marginal cost curve is dependent of the

law of diminishing marginal returns

increasing ___ 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 resouce

marginal

when the____ cost falls below the ____ cost, the average cost should be decreasing

marginal and average

total revenue euqals

price times quantity

a curve showing the average total cost for different levels of output when at least one input of production is fixed, typically plant capacity, is the ____ run average cost curve

short

marginal product is

the additional output produced as a result of utilizing one more unit of a variable resource (ie. labor or capital)

in making a decision about how much output it should produce to maximize its profits, which two pieces of information does a firm need?

the extra benefit of producing that unit the extra cost associated with producing an additional unit of output. also the marginal cost and the marginal revenue

the short run is

the time period in which at least one input is fixed but other inputs can be changed

being able to calculate total product , average product and marginal product is important

to operate efficiently and maximize profits

costs that increase as production increases and decrease as production decreases are _____ costs

variable cost

the reasons for breaking average total cost into two components are

average variable cost is used to determine whether a firm should continue to operate or should shut down in the short run and the constantly declining average fixed cost is apparent.

marginal cost

can be increasing or decreasing and still be above or below the average cost.

zero accounting profit means that the value of economic profit is

negative

an ____ cost is associated with any cost, whether it is an implicit cost or an explicit cost.

opporotunity

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

output

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

the average fixed cost

If a business owner can produce more as a whole with an additional worker even if the marginal product associated with that worker is lower than the marginal product associated with the previous worker, then there are

diminishing marginal returns.

the sum of explicit and implicit costs is ____ costs

economic

economies of scale can result from a variet of factors, including

lower costs of inputs as firms purchase larger quantities and productivity gains from more specialized labor.