1141 Questions & Blanks Flashcards

1
Q

The four basic factors of production

FOP

A

capital
labor
management
natural resources

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2
Q

The four basic factors of production must be __________________, are used in conjunction with one another, may be ____________, and must be organized so that maximum _____________________.

A

purchased at market price
combined in varying proportions
output is obtained at minimum cost

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3
Q

The terms ____________ refer to the degree of flexibility a firm has in changing its level of output

A

short run and long run

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4
Q

To an economist, capital includes _________________

A

tools, machines, and buildings

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5
Q

The division of labor is a vital part of the labor factor of production because ______________________

A

it increases production by allowing workers to specialize in one kind of work

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6
Q

_______ includes the actual running of the firm

A

Administration

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7
Q

A _________ usually supervises and coordinates managers.

A

president or CEO

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8
Q

Opportunity costs are also called _________

A

implicit costs

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9
Q

Accounting costs are also called __________

A

explicit costs

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10
Q

___________ include the amount the entrepreneur’s labor is worth to his company, the amount he could earn at another company, the amount he could earn by leasing the building and/or land, and the amount he could earn by investing in another industry.

A

Opportunity costs

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11
Q

____________ include raw materials, fuel, labor, equipment, buildings, and machinery.

A

Accounting costs

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12
Q

________ include interest, insurance, taxes, rent, and executive salaries.

A

Fixed costs

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13
Q

________ include labor, raw materials, and utilities

A

Variable costs

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14
Q

____________ continue to decline as production increases.

A

Average fixed costs

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15
Q

____________ at first decline as output increases, but at some point they begin to rise

A

Average variable costs

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16
Q

The _____________________________ states that, as more and more of a variable input is added to an existing fixed input, at some point the additional output obtained from the additional input will decline.

A

law of diminishing marginal utility

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17
Q

___________ is the additional output produced by each additional worker.

A

Marginal product

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18
Q

___________ is the amount produced by each worker

A

average output

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19
Q

Diminishing marginal returns begin where average output begins to ___________

A

decline

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20
Q

A knowledge of its _________ is helpful to a firm in deciding whether to change output

A

marginal cost

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21
Q

Average fixed, variable, average total, and marginal costs are considered ____________

22
Q

_____________ describes the lower production costs incurred by a larger company.

A

Diseconomies of scale

23
Q

_____________ are realized by larger firms because of mass production

A

Decreasing unit costs

24
Q

At the point at which a firm experiences _____________________, it no longer has the lowest unit production costs, its managers may lose touch with the workers and with various aspects of the operation, and it is too large to operate efficiently.

A

Diseconomies of scale

25
In the long run, average costs initially fall because of ____________, remain constant for a time, and then rise because of _____________.
Economies of scale | Diseconomies of scale
26
___________ would not occur if production relationships were only technical
Diseconomies of scale
27
When a firm grows too large, ________ may lead to diseconomies of scale
increased monitoring costs | decreased morale
28
The relationship between long-run and short-run average costs is called the _________________ because of the way it looks on a graph
envelope relationship
29
If a perfectly competitive market did exist, its characteristics would include
a great many sellers who act independently of each other no interference with market forces affecting supply, demand, and price standardized products freedom of new firms to enter or leave the industry at will market price unaffected by one firm changing its output production factors that can be shifted from one firm to another
30
In the short run, only ______________ may be changed.
variable production costs
31
A/an _____________ is one in which a single producer affects price by changing output
imperfectly competitive market structure
32
The three types of imperfectly competitive market structures:
monopoly oligopoly monopolistic competition
33
A monopoly may exist because a _______ may be a legal barrier to entry into a market, ___________ may prevent entry into the market, or a firm may produce a _________ that is a natural barrier into the market.
patent social or historical constraints unique product
34
The industry demand curve, which slopes downward, is the same as the _______________
monopoly demand curve
35
A monopoly must accept a lower market price if it:
increases its output
36
____________ determine the point at which a monopoly will make the greatest profit
Marginal revenue and marginal cost
37
Prices are higher and output is lower for a _____________ than a _________________
monopoly | firm in a competitive market
38
An oligopoly is more like a ________ and a monopolistic competition is more like a ___________.
monopoly | perfectly competitive market
39
The fact that an individual firm cannot change its __________ without affecting other firms in the industry is one of the most important characteristics of an oligopoly
price
40
Because it cannot _______, an individual firm in an oligopoly cannot predict its _____________________
predict what its competitors will do | demand schedule, marginal revenue, and output level at which MR = MC
41
__________ does not usually exist in an oligopoly because of __________
Price competition | fear of a price war
42
Collusion between firms in an oligopoly establishes prices that are ______________ and are usually _______________
higher than those in a perfect competition | above the minimum point of the ATC curve
43
A firm in an oligopoly has a ___________ because of its expectations of the reactions of other firms in the industry.
kinked demand curve
44
The demand curve for _________ in an oligopoly is more elastic than the demand curve for _____________
a single firm | the entire industry
45
The elements of competition that exist in an oligopoly include the facts that ____________
new firms may enter the market all firms may advertise to increase sales technological advances may increase profits by reducing costs
46
Characteristics of a monopolistic competition include the facts that products are ___________
differentiated firms act independently there are multiple levels of competition entry of new firms in the long run is easy, so there are no long-run profits
47
No firm in a monopolistic competition considers ____________ when making a decision
the others' reactions
48
A firm in a monopolistic competitive market structure produces at a _________ than one in a _______________
lower point | perfectly competitive market structure
49
Because firms may not be attempting to ___________ and because the ____________ may not be considered a cost, no economic model can accurately represent "real-world" firms.
maximize profits | decision-maker's salary
50
MC = MR = P
except in oligopoly