microeconomics- production function

Time frame in which the quantity of one or more resources used in production is fixed.

Firm's plant - capital, land, and entrepreneurship

Labor, raw materials, and energy

To increase output in short run, firm must (increase or decrease) the quantity of variable factors.

Time frame in which the quantities of all resources—including the plant size—can be varied.

Cost incurred by the firm and cannot be changed.

Total output produced in a given period

As the quantity of labor employed increases: total product (increases or decreases)

As the quantity of labor employed increases: Marginal Product (increase or decreases)

As the quantity of labor employed increases: average product (increase or decrease)

The change in total output that results from a one-unit increase in the quantity of labor employed, with all other inputs remaining the same.

Equal to total product divided by the quantity of labor employed.

Arise from increased specialization and division of labor.

Arises because each additional worker has less access to capital and less space in which to work.

When marginal product exceeds average product, average product (increases or decreases).

When marginal product is below average product, average product (increases of decreases)

When marginal product equals average product, average product is at its (maximum or minimum).

The cost of the firm's fixed inputs (land, machinery, loans)

The cost of the firm's variable inputs.

Total Cost =

The cost of a typical unit of output produced. The mean value of the Total Cost.

Average total cost (ATC) =

Average variable cost (AVC) =

Average fixed cost (AFC) =

The increase in Total Cost that results from a one unit increase in total product

marginal cost (MC) =

The AFC curve (increases or decreases) as output increases.

Variable cost (increases or decreases) as output increases.

Total cost (increases or decreases) as output increases

Over the output range with increasing marginal returns, marginal cost (rises or falls) as output increases.

Over the output range with diminishing marginal returns, marginal cost (rises or falls) as output increases.

MC equals ATC at the (maximum or minimum)

MC is at its minimum at the same output level at which MP is at its (maximum or minimum)

When MP is rising, MC is (rising or falling)

AVC is at its minimum at the same output level at which AP is at its (maximum or minimum)

When AP is rising, AVC is (rising or falling).

The position of a firm's short run cost curves depends on two factors:

An increase in productivity shifts the product curves (upward or downward) and the cost curves (upward or downward).

An increase in the price of a factor of production (increases or decreases) costs and shifts the cost curves

An increase in a (fixed or variable) cost shifts the total cost (TC ) and average total cost (ATC ) curves upward but does not shift the marginal cost (MC ) curve, variable cost (VC) and average variable cost (AVC).

An increase in a (fixed or variable) cost shifts the total cost (TC ), average total cost (ATC ), and marginal cost (MC ) curves upward but does not shift fixed cost (FC) and average fixed cost (AFC) curves

The size of the production process

economies of scale

Diseconomies of scale

1. Occur when increasing production allows greater specialization Workers produce more efficiently when focusing on a specialized task.

1. Due to coordination problems in large organizations when management becomes stretched

the increase in output resulting from a one-unit increase in the amount of capital employed, holding constant the amount of labor employed.

The larger the plant, the greater is the output at which ATC is at a (maximum or minimum)

Economies of scale are features of a firm's technology that lead to (rising or falling) long-run average cost (LRAC) as output increases.

Diseconomies of scale are features of a firm's technology that lead to (rising or falling) long-run average cost (LRAC) as output increases.

The smallest quantity of output at which the long-run average cost reaches its lowest level.

If the LRAC curve is U-shaped, the minimum point identifies the _______ ______ ______ output level.

true or false: the marginal cost curve intersects the average fixed cost curve at its minimum

true or false: When marginal cost is greater than average variable cost, average variable cost is increasing

true or false: When marginal cost is less than average variable cost, average variable cost is decreasing

true or false: the marginal cost curve intersects the average variable cost at its minimum

Features of a​ firm's technology that lead to falling​ long-run average cost as output increases.

Features of a​ firm's technology that lead to rising​ long-run average cost as output increases.

When economies of scale are​ present, the LRAC curve​ (slopes downward or slopes upward).

When diseconomies of scale are​ present, the LRAC curve​ (slopes downward or slopes upward).

As a firm uses more of a variable​ input, given the quantity of fixed​ inputs, the marginal product of the variable input eventually diminishes.

In a diagram with the total cost curve and the total variable cost​ curve, as output​ increases, the vertical distance between these two curves

A.is constant.

B. increases

C.decreases.

D.gets smaller and then bigger again.