Midterm Review Flashcards
(15 cards)
The Ten Principles:
First set: 1. People face trade-offs
2. Cost of something is what you give up to get it
3. Rational agents think at the margin
4. People respond to incentives
Second set: 5. Trade can make everyone better
6. Markets are usually a good way to organize economic activity
7. Governments can sometimes improve markets outcomes
Third set: 8. Country’s standard of living depends on its ability to produce goods and services.
9 & 10 not important
explicit costs
input costs that require an outlay of money by the firm
Total Revenue=
Price*Quantity
implicit costs
input costs that do not require an outlay of money by the firm
The average-total-cost curve intersects
marginal cost at the minimum of average total cost.
In the short run, a firm incurs fixed costs
whether it produces output or not
A production function is a relationship between inputs and
quantity of output
When average cost is greater than marginal cost, marginal cost must be
The direction of change in marginal cost cannot be determined from this information.
The average-total-cost curve is unaffected by diminishing marginal product.
False
Some costs do not vary with the quantity of output produced. Those costs are called
fixed costs
Economies of scale arise when
workers are able to specialize in a particular task
Cindy’s Car Wash has average variable costs of $2 and average fixed costs of $3 when it produces 100 units of output (car washes). The firm’s total cost is
$500
Which of the following can be added to profit to obtain total revenue?
totalncost
A difference between explicit and implicit costs is that
implicit costs do not require a direct monetary outlay by the firm, whereas explicit costs do.
Max profit=
Marginal revenue is equal to marginal costs
