Boring Basics
Marginal product decreases, but total product is still rising. What stage is this?
What are diminishing marginal returns?
A firm’s average variable cost is rising. What must be true about marginal cost?
What is MC must be greater than AVC?
If expanding output leads to lower average costs, the firm experiences…
What is Economies of scale?
If accounting profit is $100,000 and explicit costs are $60,000, what is total revenue?
What is $160,000?
A firm’s price is $20, its average variable cost is $25, and its average total cost is $35. What should the firm do in the short run?
What is Shut down?
Why is the law of diminishing marginal returns not a long-run concept?
What is in the long run, all inputs are variable?
Total fixed cost is $120, and output is 20 units. What is the average fixed cost?
What is $6?
A firm doubles all its inputs, and output also doubles. What does this indicate about the firm’s long-run production?
What are Constant returns to scale?
A firm has an economic profit of zero. What must be true about revenue and total cost?
What is they are equal?
A firm’s price is $12, average variable cost is $10, and average total cost is $15. Should the firm produce in the short run?
What is yes?
If the marginal product is rising, what happens to the marginal cost?
What is marginal cost falls?
If total cost rises from $500 to $545 when output goes from 25 to 26 units, what is the marginal cost?
What is $45?
If a firm experiences a falling long-run average total cost as output increases from 100 to 500 units, what is it called?
What are economies of scale?
A firm has $200 in accounting profit and $250 in implicit costs. What is economic profit?
What is -$50?
In the long run, what happens to the number of firms in a perfectly competitive market if existing firms earn zero economic profit?
What is stay the same?
When marginal product becomes negative, what does total product do?
What is decreases?
The average total cost is falling even though the marginal cost is rising. Explain why.
What is marginal cost is rising but still below the average total cost?
The long-run average total cost rises when a firm grows too large. What is this called?
What are diseconomies of scale?
If a firm leaves an industry even with positive accounting profit, what must be true?
What is it has a negative economic profit?
If the market price is exactly equal to a firm’s average total cost, what happens in the long run?
What is the firm earns zero economic profit and stays in the market?
A firm adds more workers, and output increases at a decreasing rate. What does this imply about marginal cost?
What is marginal cost is rising?
A firm is currently producing at a level where its marginal cost is equal to its average total cost. If the firm decides to increase production, what will happen to its average total cost?
What is ATC will start to rise?
A firm’s long-run average total cost falls as output increases from 100 units to 300 units. What type of returns to scale is the firm experiencing?
What are economies of scale?
A firm finds that its marginal revenue is $50 and its marginal cost is $65 for the last unit produced. What should the firm do to maximize profit?
What is decrease output?
A company is currently producing 100 units of a product at a total cost of $1,000. If the marginal cost of producing one more unit is $15, what is the average total cost of producing 101 units?
What is $10.05?