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23 True/False questions

  1. average total costFixed cost divided by the quantity of output

          

  2. average fixed costtotal cost divided by the quantity of output produced

          

  3. economies of scalereductions in the average total cost of producing a product as the firm expands the size of plant (its output) in the long run; the economies of mass production

          

  4. varible costscosts that change

          

  5. long runA period of sufficient time to alter all factors of production used in the productive process - all inputs can be changed.

          

  6. economic profitTotal revenue minus total cost, including both explicit and implicit costs

          

  7. opportunity costthe amount of other products that must be forgone or sacrificed to produce a unit of a product

          

  8. fixed costsCosts that do not vary with the quantity of output produced

          

  9. law of diminishing returnsthe principle that as successive increments of a variable resource are added to a fixed resource, the marginal product of the variable resource will eventually decrease

          

  10. total productfixed costs plus variable costs

          

  11. normal profitthe payment made by a firm to obtain and retain entrepreneurial ability; the minimum income entrepreneurial ability must receive to induce it to perform entrepreneurial functions for a firm

          

  12. average varible costFixed cost divided by the quantity of output

          

  13. explicit costThe monetary income a firm sacrifices when it uses a resource it owns rather than supplying the resource in the market; equal to what the resource could have earned in the best-paying alternative employment; includes a normal profit

          

  14. total costfixed costs plus variable costs

          

  15. minimum efficient scaleincreases in the average total cost of producing a product as the firm expands the size of its plant (its output) in the long run

          

  16. marginal productthe additional output that can be produced by adding one more unit of a specific input

          

  17. short runA period of time sufficiently short that at least some of the firm's factors of production are fixed

          

  18. natural monopolyfixed costs plus variable costs

          

  19. constant returns of scaleThe situation when a firm's long-run average costs remain unchanged as it increases output.

          

  20. marginal costThe extra cost incurred when a business produces one additional unit of a product

          

  21. implicit costThe monetary income a firm sacrifices when it uses a resource it owns rather than supplying the resource in the market; equal to what the resource could have earned in the best-paying alternative employment; includes a normal profit

          

  22. diseconomies of scalereductions in the average total cost of producing a product as the firm expands the size of plant (its output) in the long run; the economies of mass production

          

  23. average producttotal output produced by a firm