chapter 15

Question 1

the resources that go into production

Answer 1

inputs

Question 2

the goods and services that result from production

Answer 2

outputs

Question 3

production costs that can be adjusted relatively quickly and that do not need to be incurred if no production occurs

Answer 3

variable costs

Question 4

production costs that cannot be adjusted quickly and that must be paid even if no production occurs

Answer 4

fixed costs (suck costs)

Question 5

actual monetary costs paid by a producer as well as estimated reduction in the value of the producer’s capital stock

Answer 5

accounting costs

Question 6

the total cost of production, including both accounting and opportunity costs

Answer 6

economic cost

Question 7

an equation or graph that represents a relationship between types and quantities of inputs and the quantity of output

Answer 7

production function

Question 8

a production input that is fixed in quantity, regardless of the level of production

Answer 8

fixed input

Question 9

a production input whose quantity can be changed relatively quickly, resulting in changes in the level of production

Answer 9

variable input

Question 10

(in terms of production processes) a period in which at least one production input has a fixed quantity

Answer 10

short run

Question 11

a fixed input that creates a constraint to increasing production

Answer 11

limiting factor

Question 12

(in terms of production processes) a period in which all production inputs can be varied in quantity

Answer 12

long run

Question 13

a curve showing the total amount of output produced with different levels of one variable input, holding all other inputs constant

Answer 13

total product curve

Question 14

the additional quantity of output produced by increasing the level of a variable input by one, holding all other inputs constant

Answer 14

marginal product

Question 15

a situation in which each successive unit of a variable input produces a smaller marginal product

Answer 15

diminishing marginal returns

Question 16

a situation in which each successive unit of a variable input produces an increasing marginal product

Answer 16

constant marginal returns

Question 17

a situation in which each successive unit of a variable input produces a larger marginal product

Answer 17

increasing marginal returns

Question 18

the sum of fixed and variable costs

Answer 18

total costs

Question 19

a graph showing the relationship between the total cost of production and the level of output

Answer 19

total cost curve

Question 20

the situation in which the cost of producing one additional unit of output rises as more output is produced

Answer 20

increasing marginal costs

Question 21

the situation in which the cost of producing one additional unit of output stays the same as more output is produced

Answer 21

constant marginal costs

Question 22

the situation in which the cost of producing one additional unit of output falls as more output is produced.

Answer 22

decreasing marginal costs

Question 23

cost per unit of output, computed as total cost divided by the quantity of output produced

Answer 23

average cost (or average total cost)

Question 24

the cost of production per unit of output when all inputs can be varied in quantity

Answer 24

long-run average cost

Question 25

situations in which the long-run average cost of production falls as the size of the enterprise increases

Answer 25

economies of scale

Question 26

situations in which the long-run average cost of production stays the same as the size of the enterprise increases

Answer 26

constant returns to scale

Question 27

situations in which the long-run average cost of production rises as the size of the enterprise increases

Answer 27

diseconomies of scale

Question 28

the smallest size an enterprise can be and still benefit from low long-run average costs

Answer 28

minimum efficient scale

Question 29

the largest size an enterprise can be and still benefit from low long-run average costs

Answer 29

maximum efficient scale

Question 30

increasing the use of some inputs, and decreasing that of others, while producing the same good or service

Answer 30

input substitution