Are 201- Ch. 8

Front 1

Costs serve what functions... how do they help us in economics?

Back 1

- costs are of vital importance to a firm's decision to start up or shut down
-play a vital role in the expansion and contraction of firms
-determine where firms should expand
-crucial determinant of firm behavior

Front 2

___= the sum of all costs incurred in producing goods or sercices; the more produced, the larger the costs
-fixed cost and variable cost are the 2 key components

Back 2

total costs

Front 3

__= costs of production that do not depend on the quantity of production; part of total costs do not vary with the amt produced in the short run
-cost of factories, land, machines, and all other things that do not change when production changes in the short run

Back 3

fixed costs

Front 4

__= costs of production that vary with the quantity of production; vary in the short run as production changes
-include wage payments, gasoline, fertilizer and all other things that change as production changes

Back 4

variable costs

Front 5

___= the period of time during which it is not possible to change all inputs to production; only some inputs, such as labor can be changed
-ex; time is too short to build a new building or factory

Back 5

short run

Front 6

___= the minimum period of time during which all inputs to production can be changed; even capital can be changed ; factories, satellites, buildings can be built/changed during this time

Back 6

long run

Front 7

___= the change in total costs due to a one-unit change in quantity produced

Back 7

marginal cost

Front 8

__= total costs of productuin divided by the quantity produced

Back 8

average total costs

Front 9

____= variable costs divided by the quantity produced

Back 9

average variable cost

Front 10

__= fixed costs divided by the quantity produced

Back 10

average fixed cost

Front 11

___= a relationship that shows the quantity of output for any given amt of input

Back 11

production function

Front 12

___= the quantity produced divided by the amt of labor input; the total product

Back 12

avg product of labor

Front 13

___= the point at which price equals the minimum of ATC; profits are at zero

Back 13

breakeven point

Front 14

__=the pt at which price equals the minimum AVC

Back 14

shutdown point

Front 15

___= the curve that traces out the short-run avg total cost curves, showing the lowest ATC for each quantity produced as the firm expands in the long run
-way economists study the behavior of a firm over time

Back 15

long- run ATC curve

Front 16

___ or increasing returns to scale situation in which long-run ATC decline as the output of a firm increases
-downward slope of the curve

Back 16

economies of scale

Front 17

___ or decreasing returns to scale is a situation in which long-run ATC increases as the output of a firm increases; curve is increasing

Back 17

diseconomies of scale

Front 18

___- a situation where long-run ATC is constant as the output of a firm changes; curve is flat

Back 18

constant returns to scale

Front 19

___= the smallest scale of production for which long-run ATC is at a minimumj

Back 19

minimum efficent scale