3.1
This is the total amount of output a firm produces from a given set of inputs.
What is Total Product?
The way to represent Marginal Cost
What is Change in TC/Change in Q?
These type of costs remain the same regardless of output level.
What are fixed costs?
This type of profit is calculated as total revenue minus explicit costs.
What is accounting profit?
In the long run, what is the economic profit of a firm in a perfectly competitive market?
What is zero?
This type of marginal return occurs when each additional worker adds more output than the previous one.
What are increasing marginal returns?
Does Average Fixed Cost increase or decrease as quantity increases?
What is Decreases?
This cost is calculated by dividing total cost by quantity.
What is Average Total Cost (ATC)?
A firm is maximizing profit when this condition is met between marginal cost and marginal revenue.
What is when marginal cost equals marginal revenue?
A firm will shut down in the short run if the market price falls below which specific cost curve?
What is average variable cost?
This is the law that states that there comes a point when adding an additional factor of production results in smaller increases in output.
What is the law of diminishing marginal returns?
The part of ATC where Marginal Cost intersect ATC and quantity this represents
What is the Minimum-cost output?
This is a reason of how economies of scale could occur.
What is Specialization of labor, Bulk purchasing of inputs, Better use of capital, or Improved technology?
True or False: A firm can earn zero economic profit and still remain in business in the long run.
What is true?
If firms are earning negative economic profit in the long run, what will happen to the number of firms in the industry?
What is it will decrease?
If the total product is 80 and there are 5 workers, this is the average product (of labor).
What is 16?
The two ways to represent Average Total Cost
What is Total Cost/Quantity and AVC + AFC?
This curve intersects ATC and AVC at their minimum points.
What is Marginal Cost (MC)?
If the market price falls below a firm's average variable cost in the short run, the profit-maximizing decision is to do this.
What is shut down?
What do you call the market price at which a firm ceases production in the short run; equal to minimum average variable cost
What is the shut-down price?
This stage of production begins when marginal product becomes negative.
What is the stage of Negative Returns?
The effect that causes ATC to increase as quantity increases.
What is the Diminishing Returns Effect?
If total cost increases from $200 to $260 when output rises from 4 to 6, this is the marginal cost.
What is $30?
A firm's total revenue is $4000, its explicit costs are $3000, and its implicit costs are $1500. Calculate both its accounting profit and its economic profit.
What is:
Accounting profit = $1000
Economic profit = -$500?
On a graph showing firm losses in the short run, the firm will stay open if the price line lies between these two cost curves.
What is average variable cost and average total cost?