Eco 6418

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32 terms · Grad school ucf

Sources of economies scale include all except the following:

all of the above are sources of scale economies

The smallest output at which long run average cost is minimized is

The point at which minimum efficient scale is reached

Scope economies are said to rely on which of the following strategies?

Diversifying into related products

A production function is a table, a graph, or an equation showing the

maximum output that can be achieved from specified levels of inputs.

Costs increase as a firm shortens the development horizon because

A. more tasks must be undertaken concurrently; this lessens the amount of learning that can be incorporated

The long run is a time period during which

all inputs are variable.

A production function is a table, a graph, or an equation showing the

maximum output that can be achieved from specified levels of inputs.

The average product of labor is defined as the

output divided by the labor input usage

The marginal product of labor is defined by the

change in output divided by the change in labor input usage.

The marginal product of labor can be illustrated geometrically as the

slope of the total product curve with respect to labor.

Average variable cost is equal to the

total variable cost divided by the level of output.

Whenever average variable cost is declining with increases in output,

marginal cost at first decreases and then increases with output

Whenever marginal product is declining with increasing use of an input,

total product is increasing at a decreasing rate as input use increases

When average product is at a maximum, marginal product is

equal to average product.

Whenever average product is declining with increases in input usage,

marginal product is less than average product

Diminishing marginal returns

are consistent with increasing returns to scale

Break-even analysis usually assumes

average variable costs are constant.

The opportunity cost of a firm's inputs

is the value of the inputs in their most highly valued alternative use.

If average variable cost is increasing with increases in output, total fixed cost will

remain unchanged with increases in output.

The addition to total cost resulting from the addition of the last unit of output is known as

marginal cost.

Short-run marginal cost eventually increases with increasing output because

eventually marginal returns will diminish.

When average variable cost is at its minimum,

marginal cost is less than average total cost.

The long-run average cost curve slopes upward if there are

diseconomies of scale

Doctor Brown just graduated from medical school and will open her own family practice. With respect to her business, student loan repayments she makes for her tuition represent

sunk cost

When setting rates that natural monopolists can charge, regulatory commissions attempt to establish a maximum price

where price equals average variable cost plus a fair return on invested capital of monopolist.

Which of the following is true about an unregulated monopolist?

It will never allow its price to be in the inelastic portion of the industry demand curve.

Many sellers of a differentiated product are associated with which market structure?

Monopolistic Competition

A market where there are only a few sellers is known as


In the model of monopoly, firms produce a

differentiated product with considerable control over price.

A decreasing-cost industry is one in which

input prices fall or technology improves as firms enter the industry.

Oligopoly is a market structure that necessarily has

a small number of firms but more than one.

Oligopoly is the only market structure in which one finds

firm interdependence.

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