Firms, production and costs

Question 1

What is meant by a firm?

Answer 1

A firm is a commercial organisation, which sells the goods or services it produces or deals in.

Question 2

Multinational Firms

Answer 2

Owning and controlling subsidiary companies and establishments throughout the world.

Question 3

Multi-product Firms (conglomerate)

Answer 3

Producing and selling different goods and services in a number of different markets.

Question 4

Short run

Answer 4

Period during which fixed costs and the scale of production remain fixed.

Question 5

Long run

Answer 5

Period of time during which all factors become VARIABLE and the scale of output can change.

Question 6

Total costs

Answer 6

Fixed cost (short run) + variable costs (long run)

Question 7

Fixed costs

Answer 7

Costs of production that do not vary as output changes.

Question 8

Variable costs

Answer 8

Costs of production that vary with output.

Question 9

Marginal product

Answer 9

The output added by the extra worker or unit of a factor.