Firms Production Flashcards
In addition to all the cost information, the supplier needs to know the (one word) in the market place in order to determine how much to produce.
Demand
Production is the activity of a business organization using to obtain of some product.
Inputs, outputs
What do economists mean by the term depreciation?
the cost of that portion of a machine or asset used up or worn out in a year
the annual cost of any asset that is expected to be in use for more than one year
The cost of using a resource is the value or worth the resource would have in its best alternative use.
:opportunity or implicit
Which of the following are examples of an opportunity cost?
The cost of the paper used for printing textbooks is the value it would have in printing encyclopedias or romance novels.
The cost of steel used in constructing an office building is the value it would have in manufacturing automobiles or refrigerators.
True or false: The quantity that a firm produces is determined solely by the costs.
False
What types of costs do firms incur when producing products?
Implicit
Explicit
What are explicit costs?
The costs paid out to the non owners.
costs are the firm’s opportunity costs of using its self-owned, self-employed resources.
Implicit
______ and ______ costs are the costs that firms incur when employing inputs they use to produce output.
Explicit; implicit
What is the definition of explicit costs?
A firm’s monetary payments to those who supply labor services, materials, fuel, and transportation services.
A firm’s monetary payments made for the use of resources owned by others.
Which of the following are examples of implicit costs?
Use of the owner’s premises
Owner’s labour
