Exam # 2 chapter 6
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Exam # 2 chapter 6
What makes up a firms cost of production?
Implicit costs and explicit costs.
** whenever we are talking about costs we are talking about opportunity costs.
what are accounting profits?
total revenues minus the explicit costs.
what are economic profits
total revenues minus explicit and implicit costs.
what are sunk costs?
costs that have allready been incurred and cannot be recovered
what is the short run
it is a period in time in time too short for some inputs to be varied.
what is the long run?
a period in time in which a firm can adjust all inputs
what is production function?
the relationship between quantity of inputs and the quantity of outputs.
total out put Q
is the total amount of units ouyput produced by a firm
In the short run...total output will start off_______ and then as more input come out then it will slowly ________
** it will continue to increase until the variable input becomes so large in realation to quantity from of other.
Marginal product first _______ then it _______
**it rises as as the result of more effective use of fixed imputs.
what are fixed costs?
are costs that don't varies with the level of output
what are variable cost
are costs that are not fixed. they vary with the level of output
what is average fixed cost
total fixed cost divided by level output produced
what is average variable cost?
total variable cost divided by the output produced.
what is marginal cost
the cahnge in total cost associated with the change in one or more unit in an output
TFC curve is always a ________ line because the fixed costs are the same on all outputs.
the average fixed cost line constantly declines but ,,,,,
never hits zero
what does the marginal cost line bump into at its lowest point?
ATC and AVC
At high output levels high marginal costs __________ the ATC and AVC. and at low output, the Marginal cost curve _______ the ATC and AVC curves
when marginal product of labor is rising marginal cost are______
**each additional worker adds more to the total product than the previous worker