7.1-1 ; 7.2-1 ; 7.2-2 ; 7,2-3 ; 7.2-4

Question 1

True or False:

Economic and accounting profits differ from each other in the way that each defines costs.

Answer 1

True.

Question 2

______ uses only explicit costs, but _______ calculates opportunity costs.

Answer 2

Accounting ; economics

Question 3

_____ costs are unrecoverable coasts that should not effect current decisions.

Answer 3

Sunk

Question 4

Costs for which a monetary payment must be made are called

Answer 4

explicit costs.

Question 5

What is the equation for profit?

Answer 5

Profit = Total Revenue - Total Costs

Question 6

If total revenue is _____ ____ the sum of the opportunity costs of the resources, the resources will stay at the firm.

Answer 6

greater than

Question 7

If total revenue is _____ ____ the sum of the opportunity costs of the resources, the resources will seek employment elsewhere.

Answer 7

less than

Question 8

Accounting costs do not account for what?

Answer 8

The employees’, the manager’s, or the shareholders’ opportunity costs.

Question 9

The costs that a firm must write checks for are

Answer 9

accounting costs.

Question 10

True or False:
Economic profit is always more than accounting profit because it has to add in
opportunity costs.

Answer 10

False.

Question 11

Economic profit is all profit greater than the _______ ____.

Answer 11

opportunity costs.

Question 12

Economic profit is also called

Answer 12

rent.

Question 13

Output is also called

Answer 13

total product.

Question 14

______ is the amount of product a firm can produce with a

given set of inputs.

Answer 14

Output

Question 15

______ are resources that a firm uses to produce a final product.

Answer 15

Inputs

Question 16

True or False:

The short run is a period of time during which a firm can change only one input.

Answer 16

True.

Question 17

What inputs can be changed in the short run?

Answer 17

variable inputs.

Question 18

The three concepts one must know in a firm are _______, _____, and _____.

Answer 18

technology, costs, and prices.

Question 19

True or False:

One should not make a schedule to represent the output of a firm.

Answer 19

False.

Question 20

_____ is a variable input in the short run, while technology and other inputs are held constant.

Answer 20

Labor

Question 21

_______ simply means a catalog of things that a firm knows how to do.

Answer 21

Technology

Question 22

When describing production, economics begins with what?

Answer 22

A purely engineering relationship.

Question 23

At least one of the inputs is fixed and cannot be changed in the

Answer 23

short run.

Question 24

True or False:

First distinguish between fixed inputs and variable inputs when looking at total output relationship.

Answer 24

True.

Question 25

The ____ _____ curve graphically explains a firm’s total output in the short run.

Answer 25

total product (TP)

Question 26

True or False: | Total product is not a function of variable input.

Answer 26

False.

Question 27

The change in output generated from adding one more unit of the variable input, labor is what?

Answer 27

Marginal product (MP) of labor

Question 28

Teamwork, specialization, and using the | variable input with the fixed inputs gives the total product curve _____.

Answer 28

shape

Question 29

As labor changes, _____ ______ changes.

Answer 29

total output

Question 30

True or False: | For a total product curve, the horizontal axis is output and the vertical axis is labor.

Answer 30

False.

Question 31

On the curve where labor and output are low, the curve is ______.

Answer 31

convex.

Question 32

At _______, the production is increasing at an increasing rate.

Answer 32

convexity

Question 33

True or False: As more workers are added at low production levels, they can specialize in tasks and more efficiently use the fixed inputs.

Answer 33

True.

Question 34

_______ means that production is increasing but at a decreasing rate.

Answer 34

Concavity

Question 35

The total product curve hits a _______ point after which output decreases with each additional worker.

Answer 35

maximum

Question 36

True or False: After the minimum, additional employees are nonproductive and unable to use the fixed inputs efficiently.

Answer 36

False.

Question 37

The MP curve reflects changes in __ curve.

Answer 37

TP.

Question 38

MP and TP are ______ related.

Answer 38

directly

Question 39

When the slope of the TP curve is increasing, MP is ______.

Answer 39

increasing.

Question 40

In the _____ range where TP is increasing at a decreasing rate, MP is positive but falling.

Answer 40

middle

Question 41

At the point where TP is at its maximum, MP equals what?

Answer 41

zero

Question 42

After the maximum point, __ is actually negative, meaning that __ is falling.

Answer 42

MP ; TP

Question 43

True or False: You can draw the MP curve by finding the change in total product for each unit of labor.

Answer 43

True.

Question 44

The trick with a two-story diagram is the graphs are ______ and they have the same variable measured on the horizontal axis

Answer 44

related

Question 45

One could write TP of _ , because the total output that you could produce in the short run, is a function of labor.

Answer 45

L

Question 46

I could write __ of L, because the marginal product changes as I add additional workers to my factory.

Answer 46

MP

Question 47

One is talking about the number of workers who are working in the factory at a _______ ____.

Answer 47

particular time.

Question 48

True or False: | The marginal product curve is the slope of the total product curve.

Answer 48

True.

Question 49

AP stands for what?

Answer 49

average product

Question 50

Average product is also called average product of _____.

Answer 50

labor.

Question 51

Average product is equal too

Answer 51

TP / total quantity of labor

Question 52

The average amount of output each worker can produce is called

Answer 52

AP

Question 53

True or False: | The AP curve and MP curve never intersect.

Answer 53

False.

Question 54

The AP curve and MP curve intersect at the _______ average product.

Answer 54

maximum.

Question 55

AP initially rises to a maximum and then ____ as additional workers are added.

Answer 55

falls

Question 56

When AP is rising, it is _____ MP.

Answer 56

below

Question 57

When AP is falling, it is _____ MP.

Answer 57

above

Question 58

True or False: If an additional worker adds more to total output than the average, then the average is pulled up.

Answer 58

True.

Question 59

At some point, an additional worker starts adding | ____ than the average to TP.

Answer 59

less

Question 60

True or False: | The marginal product tells the firm whether or not it will make a positive profit.

Answer 60

False. | average product