1141 Questions & Blanks Flashcards
The four basic factors of production
FOP
capital
labor
management
natural resources
The four basic factors of production must be __________________, are used in conjunction with one another, may be ____________, and must be organized so that maximum _____________________.
purchased at market price
combined in varying proportions
output is obtained at minimum cost
The terms ____________ refer to the degree of flexibility a firm has in changing its level of output
short run and long run
To an economist, capital includes _________________
tools, machines, and buildings
The division of labor is a vital part of the labor factor of production because ______________________
it increases production by allowing workers to specialize in one kind of work
_______ includes the actual running of the firm
Administration
A _________ usually supervises and coordinates managers.
president or CEO
Opportunity costs are also called _________
implicit costs
Accounting costs are also called __________
explicit costs
___________ 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.
Opportunity costs
____________ include raw materials, fuel, labor, equipment, buildings, and machinery.
Accounting costs
________ include interest, insurance, taxes, rent, and executive salaries.
Fixed costs
________ include labor, raw materials, and utilities
Variable costs
____________ continue to decline as production increases.
Average fixed costs
____________ at first decline as output increases, but at some point they begin to rise
Average variable costs
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.
law of diminishing marginal utility
___________ is the additional output produced by each additional worker.
Marginal product
___________ is the amount produced by each worker
average output
Diminishing marginal returns begin where average output begins to ___________
decline
A knowledge of its _________ is helpful to a firm in deciding whether to change output
marginal cost
Average fixed, variable, average total, and marginal costs are considered ____________
short run
_____________ describes the lower production costs incurred by a larger company.
Diseconomies of scale
_____________ are realized by larger firms because of mass production
Decreasing unit costs
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.
Diseconomies of scale