Chapter 11 Flashcards

1
Q

Short run

A

at least one of the firms inputs is fixed

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2
Q

Long run

A

Firms can vary it’s inputs and adopt new technology

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3
Q

Total cost

A

The cost of all the inputs a firm uses in production

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4
Q

Variable cost

A

Cost changes as output changes

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5
Q

Fixed costs

A

Costs remains the same as output changes

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6
Q

Explicit costs

A

When a firm spends money

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7
Q

Implicit costs aka accounting cost

A

When a firm experiences a nonmonetary opportunity cost

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8
Q

Production function

A

The relationship between the inputs employed by a firm and the maximum output the firm can produce with those inputs

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9
Q

Marginal product of labor

A

More output the firm produces when they hire more workers

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10
Q

Law of diminishing returns

A

Adding more of a variable input to the same amount of fixed input will cause the marginal product of the variable input to decline - applies in the short run

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11
Q

Long-run average cost curve

A

A curve that shows the lowest cost at which a firm is able to produce a given quantity of output in the long run, when no inputs are fixed

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12
Q

Economies of scale

A

When a firms long run average cost falls as it increases the quantity of output is produces

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13
Q

Minimum efficient scale

A

The level of output at which all economies of scale are exhausted

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14
Q

Diseconomies of scale

A

When a firm’s long run average total cost rises as the firm increases output

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