Micro Final

If marginal cost is greater than average total cost, then

average total cost is increasing

The short run is the time frame in which quantities ___

of SOME factors of production are FIXED

the long run is the period of time in which the quantities ___

of ALL factors of production are VARIED

when marginal product exceeds average product, ___ product is increasing

average

when average product exceeds marginal product, ___ product is increasing

average

When marginal cost is greater than average variable cost, average variable cost is ___

increasing

The marginal cost curve intersects the average variable cost curve at its ___

minimum

when marginal cost is less than average total cost, average total cost is ___

decreasing

when the marginal product curve is ___, the marginal cost curve is falling

rising

when the average product curve is ___, the average variable cost curve is falling

rising

Maximum MP occurs at the same output as ___

minimum MC

Maximum AP occurs at the same output as ___

minimum AVC

Milk is a ___ factor of production in the production of lattes

variable

when the price of milk increases, the TVC curve ___ and the TFC curve ___

shifts upward, does not shift

when the price of milk increases, the AVC curve ___ and the MC curve ___

shifts upward, shifts upward

when the price of milk decreases, the AFC curve ___ and the ATC curve ___

does not shift, shifts upward

marginal cost exceeds average variable cost but is less than average total cost, ___

average fixed cost is falling more quickly than average variable cost is rising

___ are features of a firm’s technology that lead to falling long-run average cost as output increases

economies of scale

___ are features of a firm’s technology that lead to rising long- run average cost as output increases

diseconomies of scale

when economies of scale are present, the LRAC curve ___

slopes downward

when diseconomies of scale are present, the LRAC curve ___

slopes upward

the smallest quantity of output at which long-run average cost reaches its lowest level is the firm’s ___

minimum efficient scale

the law of diminishing returns states that as

a firm uses more of a variable input, given the quantity of fixed inputs, the marginal product of the variable input eventually diminishes

short run

time frame in which the quantity of at least one factor of production is fixed

labor is a ___ factor of production

variable

in the short run, decisions are ___

easily reversed

long run

time frame in which the quantities of all factors of production can be varied

sunk cost

past expenditures that have no resale value

all fixed factors are called

the firm’s plant

to increase output in the short run, a firm must increase the amount of ___

labor employed

what are the 3 concepts that describe the relationship between output and the quantity of labor employed

total product marginal product average product

total product

maximum output that a given quantity of labor can produce

marginal product of labor

change in total output that results from one-unit increase in the quantity of labor employed

average product of labor

equal to total product divided by the quantity of labor employed

as the quantity of labor employed increases:

total product increases marginal product increases (initially) average product decreases

A sunk cost is irrelevant to a firm’s current decisions because

it cannot be changed by any current decision

a sunk cost is in the past expenditure on a plant and has ___

no resale value

what are the only costs that influence current decisions?

short run costs of changing labor inputs and long run costs of changing the plant

the marginal product of labor initially ____

increases and then eventually decreases

the average produce of labor initially ___

increases and then decreases

the law of diminishing returns states that as a firm uses more of a VARIABLE factor of production, with a given quantity of a FIXED factor of product, the ____ product of the ___ factor eventually diminishes

marginal variable

marginal product of labor is__

the change in total product that results from a one-unit increase in the quantity of labor employed

total product is the total ___ of a good produces in a given period

quantity

marginal product is the change in ___ product that results from a one-unit increase in the ___

total, quantity of labor employed

average product is the total product divided by the ___

quantity of a factor of production

the law of diminishing marginal returns states that as a firm uses more of a VARIABLE factor of production with a given quantity of the FIXED factor of production, the ___ product of the ___ factor eventually diminishes

marginal, variable

true of false: when marginal cost is greater than the average variable cost, average variable cost is increasing

true

true or false: when marginal cost is less than average total cost, average total cost is decreasing

true

true or false: the marginal cost curve intersects the average fixed cost curve at it’s minimum

false

true or false: the marginal cost curve intersects the average variable cost curve at its minimum

true

marginal product

increase in total product that results from a 1-unit increases in the quantity of labor employed

average product

labor is equal to total product divided by the quantity of labor employed

increasing marginal returns

marginal product of an additional worker exceeds the marginal product of the previous worker

diminishing marginal returns

marginal product of an additional worker is less than the marginal product of the previous worker (as more workers are added, there is less space for them to be productive)

the marginal product curve crosses the average product curve at the ____

maximum average product

total cost

cost of all the factors of production (fixed and variable costs)

marginal cost

increase in total cost that results from a 1-unit increase in output

average total cost

AFC + AVC

the MC curve intersects the AVC curve and the ATC curve at ___

the minimum points

when marginal cost is less than average cost, average cost is ___

decreasing

when marginal cost exceeds average cost, average cost is ___

increasing