SEMI FINALS

Question 1

is the creation of any good or service to sell to buyers. It is any activity that creates value. It is the creation of outputs by business firms, government agencies, and non-profit institutions. It is n activity where inputs are transformed into outputs.

Answer 1

Production

Question 2

it includes raw materials, ingredients, supplies, tools, machinery, equipment, and physical facilities.

Answer 2

Capital

Question 3

combines and processes the various materials.

Answer 3

labor

Question 4

is where it is allotted for processing is located.

Answer 4

land

Question 5

performs functions like supervision, planning, control, coordination, and leadership.

Answer 5

Entrepreneurial or managerial talent

Question 6

is the relationship between the number of inputs required and the amount of output obtained. It is a schedule showing the maximum amount of outputs produced from any specified sets of inputs given the existing technology.

Answer 6

production function

Question 7

who simplify that a production technology tells us the specific quantities of inputs needed to produce any given service or good. Several different techniques can produce the most outputs.

Answer 7

Case, Fair, and Oster (2017)

Question 8

Five hundred men and women could descend on the building with sledgehammers and carry the pieces away by hand; this would be a

Answer 8

labor-intensive technology

Question 9

Two people could produce the same park with a wrecking crane, a steam shovel, a backhoe, and a dump truck; this would be

Answer 9

capital- intensive technology

Question 10

are composed of short-run, which refers to the time frame in which the input of one or more productive agents is fixed. This is any period not long enough to allow the full effects of some changes to have operated.

Answer 10

Time frame references

Question 11

refers to the period in which all inputs are variable. This is because when fixed inputs need adjustment, it can be done when given sufficient time.

Answer 11

long run

Question 12

refers to the total output produced in physical units.

Answer 12

total output/total product

Question 13

refers to the total output divided by the variable inputs’ quantity under consideration

Answer 13

average product

Question 14

refers to the additional output attributed to the increase in the variable inputs’ quantity under consideration.

Answer 14

marginal product

Question 15

total product (TP) increases. Average product (AP) decreases, and marginal product (MP) diminishes. This process is called

Answer 15

increasing returns to scale

Question 16

the marginal product is at zero. That is, the additional variable input yields no increase in output. This phenomenon is called

Answer 16

the constant returns to scale

Question 17

the average product (AP) decreases as the total product (TP) is maximum. This is where a rational producer should stop adding more input, or

Answer 17

decreasing returns to scale

Question 18

shows the productivity of the inputs at various levels. It indicates point A where the firm is most efficient. If efficiency is an objective average product curve is a useful tool of analysis.

Answer 18

average product curve

Question 19

is the additional output produced by hiring one more unit of a specific input, holding all other inputs constant.

Answer 19

marginal product

Question 20

It states that “as successive units of a variable resource (say, labor) are added to a fixed resource (say, capital of land) beyond some point, the extra or marginal product that can be attributed to each additional unit of the variable resource will decline.”

Answer 20

Law of Diminishing Returns

Question 21

It states that “as successive units of a variable resource (say, labor) are added to a fixed resource (say, capital of land) beyond some point, the extra or marginal product that can be attributed to each additional unit of the variable resource will decline.”

Answer 21

Law of Diminishing Returns

Question 22

first formulated diminishing returns based on his observations of agriculture in nineteenth-century England. He noted that within a given area of land, successive “doses” of labor and capital yielded smaller and smaller increases in crop output.

Answer 22

The British economist David Ricardo

Question 23

is a line similar to the budget line. In production, this line represents all the possible combinations of two variable inputs of equal total costs.

Answer 23

Isocost

Question 24

is like the indifference curve, which traces the different varieties of variable inputs that a firm can use to produce the given amounts of outputs.

Answer 24

Isoquant

Question 25

refers to the total payment by a firm to the owner of the factors of production; they are the expenditure side of a firm in the process of creating goods and services.

Answer 25

cost of production

Question 26

refers to the sum of all the expenditures in producing goods and services. This is derived by adding fixed cost to variable costs.

Answer 26

total cost

Question 27

is the portion of total cost which remains unchanged even if the level of output changes (ex. rent).

Answer 27

Fixed cost

Question 28

Total fixed cost is sometimes called

Answer 28

overhead

Question 29

is the part of the total cost that vary with the amount of output produced. (wages, raw material).

Answer 29

variable cost

Question 30

is the sum of those costs that vary with the level of output in the short run. To produce more output, a firm uses more inputs.

Answer 30

total variable cost

Question 31

is the sum of the average fixed cost and average variable cost. This is also known as the total cost per unit. It is determined by dividing total cost by the volume of output.

Answer 31

average cost

Question 32

is the sum of the average fixed cost and average variable cost. This is also known as the total cost per unit. It is determined by dividing total cost by the volume of output.

Answer 32

average cost

Question 33

is the cost of producing one more unit of output. it is derived by ascertaining the change in total cost and dividing it by the change in the quantity of output. This is the most important of all cost concepts. It reflects changes in variable costs.

Answer 33

marginal cost

Question 34

these are payments to the owners of production like wages, interests and others. This is also known as an expenditure cost. This is an out-of-pocket costs or costs as an accountant would define them and also known as accounting cost.

Answer 34

Explicit costs

Question 35

is where the factors of production belong to the user, so they do not pay. This is known as non-expenditure cost.

Answer 35

Implicit cost

Question 36

is a cost that has been incurred and can no longer be recovered. Examples are, Research and Development, marketing expense and equipment.

Answer 36

sunk cost

Question 37

is a cost that must be given up to obtain some items. It is something that people must take into account.

Answer 37

opportunity cost

Question 38

is less straightforward to define. We define total cost here to include out-of-pocket costs and opportunity cost of all inputs or factors of production.

Answer 38

total cost

Question 39

are sometimes referred to as explicit costs or accounting costs. These refer to costs as an accountant would calculate them.

Answer 39

out-of-pocket cost

Question 40

include the opportunity cost of every input. These opportunity costs are often referred to as implicit costs.

Answer 40

Economics cost

Question 41

is that amount that could be earned on invested capital adjusted for the riskiness of that investment

Answer 41

The opportunity cost of capital

Question 42

is a decision period during which the business has a fixed scale or a fixed factor of production and there is neither exit nor entry from the business.

Answer 42

short run

Question 43

is defined as the decision period over which firms can choose to expand or contract all of their factors of production.

Answer 43

long run

Question 44

is the additional income of a firm brought by producing and selling one additional unit of a product.

Answer 44

marginal revenue