Costs, Revenues and Profit

Question 1

What is the short run?

Answer 1

A period of time in which at least one factor of production is fixed.

Question 2

What is often the fixed variable in the short run?

Answer 2

Land or capital, but not always.

Question 3

What is the long run?

Answer 3

A period of time in which all factors of production is variable.

Question 4

How long is a firm in the short run?

Answer 4

The time it takes to increase the quantity of the fixed factor.

Question 5

How long is a firm in the long run?

Answer 5

Whilst planning a firm is always in the long run, as soon as the fixed factors are changed the firm is once again in the short run.

Question 6

All production takes place in the…

Answer 6

Short run.

Question 7

All planning takes place in the…

Answer 7

Long run

Question 8

What is total product (TP)?

Answer 8

The total output that a firm produces, using its fixed and variable factors in a given time period.

Question 9

What is the average product (AP)?

Answer 9

The output that is produced (on average) by each unit of the variable factor.

Question 10

What is marginal product (MP)?

Answer 10

The extra output that is produced by using an extra unit of the variable factor.