Chapter 4 – Costs of Production – Teacher Provided Questions.
4.1
Production, Costs, and Profit
1.
What is a business?
2.
What is production?
3.
What are inputs?
4.
What are outputs?
5.
Explain labour-intensive process.
6.
Explain capital-intensive process.
7.
Define productive efficiency.
8.
How do owners earn as much profit as possible?
9.
Define explicit costs. How else may it be referred by?
10.
Define implicit costs, provide two examples.
11.
Define economic costs and provide the formula to calculate it.
12.
Define accounting profit.
13.
Define economic profit and provide the formula to calculate it.
14.
How does economic profit determine whether a business should continue to operate?
4.2
Production in the Short Run
1.
Define fixed inputs.
2.
Define variable inputs.
3.
Define total product.
4.
What is average output? How is it calculated?
5.
What is marginal output? How is it calculated?
6.
Explain the law of diminishing marginal returns in the short run.
7.
Explain the short run in regards to a business’s inputs.
8.
Explain the Three Stages of Production.
4.3
Costs in the Short Run
1.
Explain fixed costs.
.
2.
Explain variable costs.
3.
What are the most important variable costs?
4.
Provide the formula to calculate Total cost.
5.
Define marginal cost.
6.
What is the most important cost concept in economics?.
7.
Provide the formula to calculate marginal cost.
8.
Define the three types of per-unit costs –
9.
Provide the formulas to calculate each of the three types of per-unit costs.
4.4
Production and Costs in the Long Run
1.
Define the Long run in regards to quantities used in an industry.
2.
Why does the law of diminishing marginal returns not apply in the long run?
3.
Define Increasing returns to scale ( economy of scales)
4.
What are the three basic causes of returns to scale?
5.
Define constant returns to scale.
6.
Define decreasing returns to scale.
7.
What are the two major reasons for decreasing returns to scale.
8.
Why do Manufacturing industries exhibit an extended range of increasing returns to
scale?
9.
Why do craft industries have constant returns to scale?
10.
Why do primary industries tend to have decreasing returns to scale?
11.
Outline the size of companies that most likely would be found in the three different
returns to scale. -