What is the total economic cost of production known as, consisting of fixed and variable costs? ( __ = FC + VC )
Total Cost
100
The following is an example of what type of decision (short or long):
The firm is operating under a fixed scale (fixed factor) of production
Short-Run Decision
100
This type of cost represents a firm's total cost divided by its level of output. ( ___ = AC = TC / Q )
Average Total Cost
100
What is the additional output received from hiring one additional worker known as?
Marginal Product
100
What is the value of a highest forgone alternative known as? (cost associated with opportunities that are forgone when a firm's resources are not put to their highest-value use)
Opportunity Cost
200
What is the cost that varies as the level of output varies known as?
Variable Cost
200
The following is an example of what type of decision (short or long):
Firms can neither enter nor exit an industry.
Short-Run Decision
200
This type of cost is the fixed cost divided by level of output. ( ___ = FC / Q )
Average Fixed Cost
200
What is the additional output received from the additional products produced from one additional worker known as?
Marginal Revenue Product
200
Things that go into a good or service are known as:
Inputs
300
What is the cost that does not vary with the level of output known as?
Fixed Cost
300
The following is an example of what type of decision (short or long):
No fixed factors of production, firms can increase or decrease scale of operation
Long-Run Decision
300
This type of cost is the variable cost divided by the level of output. ( ___ = VC / Q )
Average Variable Cost
300
What is the cost to hire one additional worker known as?
Marginal Resource Cost
300
What are some examples of fixed costs? (costs that do not change based on production)
Capital goods, machines, buildings, utilities.
400
What is the total money received from the sale of any given quantity of output known as? ( __ = Price x Quantity Sold )
Total Revenue
400
The following is an example of what type of decision (short or long):
New firms can enter and existing firms can exit the industry.
Long-Run Decision
400
True / False: ( AFC )The average fixed cost decreases as it approaches zero because the fixed costs are being spread over the increasing units of output.
True
400
The following is a example of what:
As more and more variable factors are added to a given quantity of fixed factors, holding technology constant, marginal product eventually drops.
Law of Diminishing Marginal Returns
400
What are some examples of variable costs? (costs that change based on production)
Labor, electricity, raw materials.
500
What is the change in cost resulting from the production of one extra unit of output known as? ( __ = change in TC / change in quantity )
Marginal Cost
500
Ex. The firm faces diminishing returns to variable inputs, and the firm has limited capacity to produce output because of which type of decision? (short or long)
Short-Run Decision
500
True / False: AVC & ATC are U-shaped, reflecting increasing and then diminishing returns.
True
500
True / False : Marginal costs ultimately increase with output in the short run. Marginal product eventually decreases with output.
True
500
Each firm uses various inputs (resources) in its production activity. What are the three most commonly used inputs?
Land (natural resources), Labor (wages and salaries), & Capital (factory, buildings, machines, tools, equipment).