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ECON 201 Final Exam Lecture Questions with Correct Answers
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ECON 201 Final Exam Lecture Questions with Correct Answers
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ECON 201 Final Exam Lecture Questions withCorrect Answers
we assume that the firm's goal is to ______ Correct Answer-maximize
profit
profit = total revenue - total cost
explicit costs Correct Answer-require an outlay of money (ex. paying
wages to workers)
implicit costs Correct Answer-do not require a cash outlay (ex. wages
the firm owner gives up by working at the firm rather than taking
another job; opportunity cost)
total cost = Correct Answer-explicit costs + implicit costs
variable costs + fixed costs
accounting profit= Correct Answer-total revenue - total explicit costs
economic profit= Correct Answer-total revenue - total costs (including
explicit and implicit costs)
accounting profit ignores ______ _______, so it's higher than economic
profit Correct Answer-implicit costs
, what is the production function? Correct Answer-The relationship
between quantity of inputs used to make a good and the quantity of
output of that good
Gets flatter as production rises
what is marginal product? Correct Answer-the increase in output that
arises from an additional unit of input
slope of the production function
Marginal product of labor (MPL)= Correct Answer-change in
quantity/change in labor
diminishing marginal product Correct Answer-marginal product of an
input declines as the quantity of the input increases
the slope of the production function decreases as more inputs are being
used
why MPL diminishes Correct Answer-in general, MPL diminishes as
Labor rises whether the fixed input is land or capital (equipment,
machines, etc)
marginal cost MC= Correct Answer-change in total cost/change in
quantity
increase in total cost arising from an extra unit of production
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