Parcial2

Question 1

factors of production

Answer 1

inputs to operate and carry out its productive activity, the capital (K), land (T), labor (L) and entrepreneurship.​

Question 2

why do costs exists?

Answer 2

Costs exist because resources are scarce and have alternative uses. ​

Question 3

What happens when a set of resources is used to produce a particular good?

Answer 3

other production opportunities associated with these resources are sacrificed. ​

Question 4

the origin of costs

Answer 4

is the sacrifice of the opportunity to produce other goods and services.​

Question 5

how is measured the economic cost or opportunity cost of a resource that is used in the production of a good?

Answer 5

is measured by the value or price it obtains in the best alternative use. ​

Question 6

Economic Costs

Answer 6

are the payments that a company must give to the resource providers so that they do not allocate their resources to alternative production opportunities. ​ These payments are of 2 types: ​Explicit or Implicit

Question 7

The explicit costs:

Answer 7

They are the monetary payments that a company makes to “external agents” that supply labor services, raw materials, fuel, transport services, etc. ​

Question 8

implicit cost:

Answer 8

is the cost of the resources own. ​
For the company, implicit costs are the payments of the own resources that it uses would have obtained in the best alternative use.​

Question 9

Accounting Profit:

Answer 9

is the total income minus the explicit costs of the company. ​

Question 10

Economic Benefit:

Answer 10

is total revenue minus all costs (explicit and implicit)

Question 11

What happens to profitability when the demand for a companys product changes?

Answer 11

its profitability may depend on how quickly it adjusts the amounts of resources it uses. ​

Question 12

Short term:

Answer 12

(Fixed Plant) The size of the plant cannot be modified, but the level of production can vary by applying greater or lesser amounts of work, raw materials, etc. ​Example: If a work shift is added to the company. ​

Question 13

Long term:

Answer 13

(Variable Plant) It is a period long enough for it to adjust the quantities of all resources, including the capacity of plant. ​ Example: If you build a new production area or add new machinery.​

Question 14

Short-term Production relations

Answer 14

In the short term, a company can combine a variable resource (labor) with their fixed resources (plant) to obtain a production level. ​

Question 15

Law of diminishing returns

Answer 15

As successive units of a variable resource (example: labor) are added to a fixed resource (example: land or capital), the additional or marginal product of each additional unit of the variable resource, decreases after a certain point.​

Question 16

Fixed Costs

Answer 16

are those costs that, in total, do not vary when the level of production changes. ​They are associated with the simple existence of a company’s plant and, therefore, must be paid even if the production is null.
Example: Leasing, equipment depreciation, insurance premiums

Question 17

Variable Costs:

Answer 17

costs that change with the level of production. Example: Payments for raw materials, fuel, electricity, work, etc. ​
The increase in variable costs associated with an increase in the unit of product is not constant. ​

Question 18

Total Cost:

Answer 18

is the sum of Fixed cost and the Variable cost for every level of production. ​
If there is no production, the Total Cost is equal to the Fixed Costs of the company. Therefore, in each unit of production, the Total Cost varies by the same amount as the Variable Cost

Question 19

Variable cost:

Answer 19

it can be controlled or disturb in the short term by modifying the production levels. ​

Question 20

Fixed costs:

Answer 20

they are beyond the immediate control of the business owner; they are unavoidable in the short term and must be paid for no matter what the level of production is

Question 21

The Marginal Cost (CMg)

Answer 21

or extra or additional cost of producing one more unit of product.

Question 22

scale economics