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Econ 2106 Extra Credit #2 > 7.3-1; 7.3-2; 7.3-3; 7.3-4; 7.3-5 > Flashcards

7.3-1; 7.3-2; 7.3-3; 7.3-4; 7.3-5 Flashcards

(61 cards)

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1
Q

Variable Cost

A

Cost of hiring the variable input needed to produce a given amount of output

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2
Q

What two things are needed to find variable cost?

A

The amount of labor needed and how much does the labor cost

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3
Q

Wage

A

Is a payment to an employee for labor services

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4
Q

What are at least 3 types of cost?

A

Variable cost, Fixed cost, Average cost, Marginal cost, Total cost

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5
Q

How is the total amount of money spent on labor for any given output calculated?

A

The total number of workers needed for a given output multiplied by their wage

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6
Q

How can variable cost be graphed?

A

By plotting variable cost and different outputs on a two dimensional graph

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7
Q

Inefficient points

A

Points in which additional workers cause total product to fall

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8
Q

T or F: Inefficient points are included on graphs?

A

False: Inefficient points are excluded from the graph

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9
Q

Variable cost curve

A

The graphed version of variabl cost that shows the cost per amount of output

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10
Q

What is on the axis’s of a variable cost curve?

A

Output is on the horizontal axis and Variable cost is on the vertical axis

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11
Q

What happens when the points begin to go backwards on a VC curve?

A

No more points are graphed because that is the point in which more labor reduces output

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12
Q

T or F: A variable curve graph is a straight line

A

False: A variable curve graph is a curve

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13
Q

When the points on a VC graph begin to go backwards does the output become more or less efficient?

A

The output becomes less efficient because more labor is producing less product

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14
Q

T or F: A VC graph does have a maximum output point

A

True

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15
Q

At the maximum output point on a VC graph it is interpreted that..?

A

Adding more labor will decrease efficiency and output

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16
Q

Marginal cost

A

Amount it costs to produce one additional unit of output

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17
Q

Mathmatical definition of marginal cost

A

Change in variable cost divided by the change in total product

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18
Q

Why does the marginal cost change?

A

Productivity changes

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19
Q

T or F: As productivity increases marginal cost decreases

A

True

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20
Q

When graphing marginal cost what are the axis’s labled?

A

The vertical axis is marginal cost while the horizontal axis is the total product

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21
Q

T or F: Productivity and cost are inversely related

A

True

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22
Q

T or F: Marginal cost and marginal product are directly related

A

False. Marginal cost and marginal product are inversely related

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23
Q

Total product

A

Identifies what outputs are possible for given amounts of input

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24
Q

What does a total product graph look like?

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25
What does a variable cost curve look like?
[Cost/Quantity ![]()](http://s3.amazonaws.com/brainscape-prod/system/cm/001/721/138/a_image_thumb.gif?1342704954)
26
What does a marginal product graph look like?
[MP/Quanity ![]()](http://s3.amazonaws.com/brainscape-prod/system/cm/001/721/145/a_image_thumb.jpg?1342705120)
27
What does the marginal cost graph look like?
[Cost/Quantity ![]()](http://s3.amazonaws.com/brainscape-prod/system/cm/001/721/152/a_image_thumb.jpg?1342705251)
28
Point of inflection
Point at which the VC curve is flat
29
Variable cost curve
Shows how much money must be spent of labor to produce a given level of output
30
Why does marginal cost decrease?
Due to specilization and teamwork
31
Why does marginal cost increase?
Because of congestion and to many workers in the workplace
32
Fixed input
An item required to produce goods and services that does not demonstrate short term variations
33
What is an example of fixed input?
An example of fixed input would be a factory. A factory is not affected by short term variations
34
Productivity
Is a measure of the efficiency of production. The measure of productivity is defined as a total output per one unit of a total input
35
Changes in MC are always the result of changes in \_\_\_\_\_?
Productivity
36
The marginal cost curve mirrors what?
The marginal production curve
37
How do you graph a MC cruve?
By plotting the cost associated with various outputs
38
What is a second way to draw the MC curve?
find the slope of the variable cost curve at several points, and plot those points below the variable cost curve.
39
Why are the MC curve and MP curve a mirror to each other?
because productivity and costs have a reciprocal/inverse relationship.
40
Marginal cost is rising when marginal product is doing what?
Falling. They are inversly related
41
What is the relationship between marginals and averages?
When marginals are higher than averages they pull averages up and when they are lower they pull averages down
42
Marginal cost equals wage dived by what? MC = W/?
Marginal product MC = W/MP
43
When marginal product reaches a maximum, marginal cost is at a \_\_\_\_\_\_\_?
Minimum. MP and MC are inversely related
44
Why does marginal product fall?
Because of congestion
45
Why does marginal product rise?
Because of teamwork and specilization
46
What is equal to Wage divided by MP?
Marginal cost. MC = W/MP
47
What mirrors a marginal cost curve?
Marginal product curve
48
Can a firm have partial workers?
Yes they would be considered part time employees
49
T or F: A rational firm will always produce goods at any level. Even if that level is inefficient.
False: No rational firm would produce at an inefficient level
50
Average variable cost
Is the variable cost per unit of total product
51
How is AVC calculated?
divide variable cost at a given total product level by that total product.
52
T or F: If AVC is lower than price then the firm could make a profit
True
53
What two cost determine if a firm could make a profit?
Variable cost and Fixed cost
54
What does AVC do?
AVC tells a firm if it has the potential to make a profit
55
What is another way to derieve the marginal cost curve?
Plot it under the variable cost curve
56
Marginal cost is the slope of the?
Variable cost curve at any given point
57
What point on the VC curve has the smallest slope?
The point of inflection
58
At the inflection point the slope changes from ____ to \_\_\_\_
Concave/Convex
59
The inflection point is the lowest point on what curve?
The MC curve. The MC is decreasing up to that point and increasing after
60
What does the VC curve show?
the increasing variable costs associated with each output level.
61

Econ 2106 Extra Credit #2 (4 decks)

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