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The marginal product of labor can be defined as the change in |
output divided by the change in labor. |
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Industrial organization is the study of how |
firms’ decisions regarding prices and quantities depend on the market conditions they face. |
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The marginal product of any input is the |
increase in total output obtained from one additional unit of that input. |
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A production function describes |
how a firm turns inputs into output. |
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The difference between accounting profit and economic profit relates to |
the manner in which costs are defined. |
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Total cost can be divided into two types of costs: |
fixed costs and variable costs. |
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Which field of economics studies how the number of firms affects the prices in a market and the efficiency of market outcomes? |
industrial organization |
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Economies of scale occur when |
long-run average total costs fall as output increases. |
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Constant returns to scale occur when a firm’s |
long-run average total costs do not vary as output increases. |
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The cost of producing the typical unit of output is the firm’s |
average total cost. |
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Some costs do not vary with the quantity of output produced. Those costs are called |
fixed costs. |
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Economists in the field of industrial organization study how |
firms’ decisions about prices and quantities depend on market conditions. |
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Economic profit is equal to total revenue minus the |
opportunity cost of producing goods and services. |
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Accounting profit is equal to |
total revenue minus the explicit cost of producing goods and services. |
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Profit is defined as |
total revenue minus total cost. |
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A firm’s opportunity costs of production are equal to its |
explicit costs + implicit costs. |
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Total revenue minus only explicit costs is called |
accounting profit. |
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Diseconomies of scale occur when |
long-run average total costs rise as output increases. |
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Marginal cost is equal to |
Change Total Cost DIVIDED by Change in Quantity |
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Which of the following measures of cost is best described as "the increase in total cost that arises from an extra unit of production?" |
marginal cost |
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When calculating a firm’s profit, an economist will subtract only |
the opportunity costs from total revenue because these include both the implicit and explicit costs of the firm. |
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For a firm, the relationship between the quantity of inputs and quantity of output is called the |
production function. |
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The firm’s efficient scale is the quantity of output that minimizes |
average total cost. |
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The efficient scale of the firm is the quantity of output that |
minimizes average total cost. |
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A total-cost curve shows the relationship between the |
quantity of output produced and the total cost of production. |
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Variable cost divided by quantity produced is |
a. average variable cost. b. marginal cost. c. average total cost. None of the above is correct. |
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When a firm experiences constant returns to scale, |
long-run average total cost is unchanged, even when output increases. |
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The difference between accounting profit and economic profit is |
implicit costs. |
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Average total cost equals |
(fixed costs + variable costs) divided by quantity produced. |
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The amount by which total cost rises when the firm produces one additional unit of output is called |
marginal cost. |
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Marginal cost equals |
(i) change in total cost divided by change in quantity produced. (ii) change in variable cost divided by change in quantity produced. |
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When the marginal product of an input declines as the quantity of that input increases, the production function exhibits |
diminishing marginal product. |
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Economists normally assume that the goal of a firm is to |
maximize its profit. |
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The amount of money that a firm receives from the sale of its output is called |
total revenue. |
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Average total cost (ATC) is calculated as follows: |
ATC = (total cost)/(quantity of output). |
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Constant returns to scale occur when the firm’s long-run |
average total costs are constant as output increases. |
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To an economist, the field of industrial organization answers which of the following questions? |
How does the number of firms affect prices and the efficiency of market outcomes? |
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Which of the following is not a property of a firm’s cost curves? |
Average total cost will cross marginal cost at the minimum of marginal cost. |
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Total revenue minus both explicit and implicit costs is called |
economic profit. |
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Which of these assumptions is often realistic for a firm in the short run? |
The firm can vary the number of workers it employs but not the size of its factory. |
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The things that must be forgone to acquire a good are called |
opportunity costs. |
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