Production and Costs

Question 1

change in output associated with adding one more input for production (ex: adding one laborer)

Answer 1

marginal product (of labor)

Question 2

change in total cost when producing one more unit of a good

Answer 2

marginal cost

Question 3

formula for marginal cost

Answer 3

= (total cost 2- total cost 1) / quantity 2 - quantity 1

Question 4

opportunity cost of resources already owned by the firm and used in business, for example, expanding a factory onto land already owned

Answer 4

implicit costs

Question 5

profit divided by the quantity of output produced; profit margin

Answer 5

average profit

Question 6

total cost divided by the quantity of output

Answer 6

average total cost

Question 7

variable cost divided by the quantity of output

Answer 7

average variable cost

Question 8

expanding all inputs proportionately does not change the average cost of production

Answer 8

constant returns to scale

Question 9

the long-run average cost of producing each individual unit increases as total output increases

Answer 9

diseconomies of scale

Question 10

economic profit formula

Answer 10

total revenues minus total costs (explicit plus implicit costs)

Question 11

short-run average cost (SRAC) curve

Answer 11

the average total cost curve in the short term; shows the total of the average
fixed costs and the average variable costs