Theory of the Firm

Descrição

ib economics (Microeconomics ) FlashCards sobre Theory of the Firm , criado por bella.calonje em 01-04-2014.
bella.calonje
FlashCards por bella.calonje, atualizado more than 1 year ago
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Criado por bella.calonje mais de 10 anos atrás
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Resumo de Recurso

Questão Responda
Short run Production At least one FOP is fixed- all production takes place in the short run
Long run production all factors of production are variable but the state of technology is fixed- all planning takes place in the long run
Define Total Product total product is the total output that a firm produces using its fixed and variable factors in a given time period
Define Average Product output that is produced on average by each unit of the variable factor- AP= TP/V
Define Marginal product MP= change in total product/ change in variable
Define eventually diminishing marginal returns as extra units of a variable factor are added to a given quantity of a fixed factor, the output from each additional unit of the variable factor will eventually diminish
Define eventually diminishing average returns As extra units of a variable factor are added to a give quantity of a fixed factor, the output per unit of the variable factor will eventually diminish
Distinguish between explicit and Implicit costs Explicit costs are any costs to a firm that involve the direct payment of money Implicit costs are the earnings that a firm could have had if it had employed its factors in another use of if it had hired out or sold them to another firm
Total fixed cost the total costs of fixed assets that a firm uses in a given time period
Total variable costs total cost of the variable assets that a firm uses in a given time period
Total Cost is the total cost of all the fixed and variable factors used to produce a certain output (fixed + variable)
Average fixed cost TFC/Q
Average variable cost TVC/Q
ATC TC/Q
Marginal Cost change in total cost/ change in quantity
Decreasing returns to scale when long run average cost is rising as output increases
Economies of Scale economies of scale are any decreases in long-run average costs that come about when a firm alters all of its factors of production in order to increase its scale of output
total revenue P x Q
Average revenue Total revenue/q
marginal revenue change in total revenue/ change in quantity
explain the shut-down price when a firm is able to cover their variable costs in the short run but not their fixed costs
Explain the break even price is when a firm is able to make normal profit in the long-run, it will cover all of its costs including its opportunity costs
Define Diseconomies of scale any increases in long run average costs that come about when a firm alters all of its factors of production in order to increase their scale of output
Why are Short Run cost curves U- Shaped because of the hypothesis of diminishing returns- diminishing average returns explain the SR average variable cost curve and eventually diminishing marginal returns explain the shape of the short run marginal cost curve
Why are Long- Run Cost curves U-Shaped? because of economies and diseconomies of scale
What are the goals of the firm other then profit maximisation? revenue maximisation growth maximisation satisficing corporate social responsibility
Increasing returns to scale when long run unit costs are falling as output increases- a given percentage increase in FOPs will lead to a greater percentage increase in output reducing long run average costs

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