Section 2

Question 0

Specialization

Answer 0

Is having a worker focus on a particular aspect of production.

Question 1

Marginal product

Answer 1

Is the change in total output brought about by adding one more worker.

Question 2

Increasing returns

Answer 2

Occur when hiring new workers causes marginal product to increase.

Question 3

Diminishing returns

Answer 3

Occurs when hiring new workers causes marginal product to decrease.

Question 4

Fixed costs

Answer 4

Are those that business owners incur no matter how much they produce.

Question 5

Variable costs

Answer 5

Depend on the level of production output.

Question 6

Total cost

Answer 6

Is the sum of fixed and variable costs.

Question 7

Marginal cost

Answer 7

Is the extra cost of producing one more unit.

Question 8

Marginal revenue

Answer 8

Is the money made from the sale of each additional unit of output.

Question 9

Total revenue

Answer 9

Is a company’s income from selling its products.

Question 10

Profit maximizing output

Answer 10

Is the level of production at which a business realizes the greatest amount of profit.