Economics Exam 3 Flashcards
A firm increased its production and sales because the firm’s manager rearranged the layout of his
factory floor. This is an example of
positive technological change.
The difference between technology and technological change is that
technology refers to the processes used by a firm to transform inputs into output while
technological change is a change in a firm’s ability to produce a given level of output with a
given quantity of inputs.
A characteristic of the long run is
all inputs can be varied.
If a producer is not able to expand its plant capacity immediately, it is
operating in the short run.
Economic costs of production differ from accounting costs in that
economic costs add the opportunity costs of a firm using its own resources while accounting
costs do not.
Implicit costs can be defined as
the non-monetary opportunity cost of using the firm’s own resources.
The production function shows
the maximum output that can be produced from a set of inputs.
Vipsana’s Gyros House sells gyros. The cost of ingredients (pita, meat, spices, etc.) to make a gyro is
$2.00. Vipsana pays her employees $60 per day. She also incurs a fixed cost of $120 per day.
Calculate Vipsana’s average fixed cost per day when she produces 50 gyros using two workers?
$2.40
If four workers can produce 18 chairs a day and five can produce 20 chairs a day, the marginal
product of the fifth worker is
2 chairs.
The law of diminishing marginal returns states
that at some point, adding more of a variable input to a given amount of a fixed input will
cause the marginal product of the variable input to decline.
If 11 workers can produce a total of 54 units of a product and a 12th worker has a marginal product
of 6 units, then the average product of 12 workers is
5 units.
Marginal cost is equal to the
change in total cost divided by the change in output
Which of the following costs will not change as output changes?
total fixed cost
Which of the following equations is correct?
AFC + AVC = ATC
When the average total cost is $16 and the total cost is $800, then the number of units the firm is
producing is
50.
The formula for total fixed cost is
TFC = TC - TVC.
Long-run cost curves are U-shaped because
of economies and diseconomies of scale.
Economies of scale exist as a firm increases its size in the long run because of all of the following
except
as a firm expands its production, its profit margin per-unit of output increases.
Which of the following is not a characteristic of a perfectly competitive market structure?
There are restrictions on exit of firms.
A very large number of small sellers who sell identical products imply
the inability of one seller to influence the price.
Suppose the equilibrium price in a perfectly competitive industry is $15 and a firm in the industry
charges $21. Which of the following will happen?
The firm will not sell any output.
The demand curve for each seller’s product in perfect competition is horizontal at the market price
because
each seller is too small to affect the market price.
The demand curve for an individual seller’s product in perfect competition i
horizontal.
If the market price is $25 in a perfectly competitive market, the marginal revenue from selling the
fifth unit is
$25.
