Chapter 11- The Firm: Production and Costs

Question 1

Explicit Costs

Answer 1

the opportunity costs of production that require a monetary payment

Question 2

Implicit Costs

Answer 2

the opportunity costs of production that do not require a monetary payment

Question 3

profits

Answer 3

the difference between total revenues and total costs

Question 4

accounting profits

Answer 4

total revenues minus total explicit costs

Question 5

economic profits

Answer 5

total revenues minus explicit and implicit costs

Question 6

sunk costs

Answer 6

costs that have been incurred and cannot be recovered

Question 7

fixed costs

Answer 7

costs that so not vary with the level of output

Question 8

total fixed costs(TFC)

Answer 8

the sum of the firms fixed costs

Question 9

variable costs

Answer 9

costs that vary with the level of outputs

Question 10

total variable cost(TVC)

Answer 10

`the sum of the firms variable costs

Question 11

total cost(TC)

Answer 11

the sum of the firms total fixed costs and total variable costs

Question 12

average total cost(ATC)

Answer 12

a per-unit cost of operation; total cost divided by output

Question 13

average fixed cost(AFC)

Answer 13

a per-unit measure of fixed costs; fixed costs divided by output

Question 14

average variable cost(AVC)

Answer 14

a per-unit measure of variable costs; variable costs divided by output

Question 15

marginal cost(MC)

Answer 15

the change in total costs resulting from a one-unit change in output

Question 16

Profits are defined as_______ minus _____

Answer 16

total revenues, total costs

Question 17

Explicit costs are input costs that require a _____payment

Answer 17

monetary

Question 18

Economists generally assume that the ultimate gal of a firm is to _______ profits

Answer 18

zero

Question 19

Accounting profits equal actual revenues minus actual expenditures of cash (explicit costs), so they do not include _____ costs.

Answer 19

Implicit

Question 20

Economists consider a zero economic profit a normal profit because it means that the firm is covering both _____ and ______costs-the total opportunity cost of its resources.

Answer 20

explicit, implicit

Question 21

_____ costs are costs that have already been incurred and cannot be recovered

Answer 21

sunk

Question 22

the short-run total costs of a business fall into two distinct categories:_____ costs and _____ costs.

Answer 22

fixed, variable

Question 23

fixed costs are costs that ________ with the level of output.

Answer 23

do not vary

Question 24

the sum of a firms fixed costs is called it_____.

Answer 24

total fixed costs

Question 25

Costs that are not fixed are called _____ costs.

Answer 25

variable

Question 26

The sum of a firms variable costs is called its ____.

Answer 26

total variable cost

Question 27

the sum of a firms total _____ costs and total _____ costs is called its total cost.

Answer 27

fixed, variable

Question 28

Average total cost equals ______ divided by the _____ produced.

Answer 28

total cost, output

Question 29

Average fixed cost equal ____ divided by the ____ produced.

Answer 29

fixed costs, output

Question 30

_____ equals total variable cost divided by the level of output produced

Answer 30

Average variable cost

Question 31

marginal costs are the _____ costs associated with the “last” unit of output produced.

Answer 31

change in total cost

Question 32

The reason for high average total costs when a firm is producing a very small amount of output is the high_____costs.

Answer 32

total