Introduction to Cost & Production Theory

False (B)

Technical Economies

<p>Marketing</p> Signup and view all the answers

<p>Better terms for loans due to size (B)</p> Signup and view all the answers

<p>Technical Economies = Efficient use of advanced production techniques Managerial Economies = Access to specialized management resources Financial Economies = Better terms for loans and financing costs Purchasing Economies = Discounts from bulk buying of inputs</p> Signup and view all the answers

<p>False (B)</p> Signup and view all the answers

<p>output</p> Signup and view all the answers

<p>Greater purchasing power (C)</p> Signup and view all the answers

<p>True (A)</p> Signup and view all the answers

<p>Division of labor increases productivity by allowing workers to specialize in specific tasks, thus improving efficiency.</p> Signup and view all the answers

<p>specialized</p> Signup and view all the answers

<p>One-time costs (A)</p> Signup and view all the answers

<p>Indivisible Inputs = Inputs that cannot be adjusted based on production levels Division of Labour = Increases efficiency through specialization One-Time Costs = Expenditures that yield long-term benefits Specialized Machinery = Capital equipment tailored for specific production stages</p> Signup and view all the answers

<p>False (B)</p> Signup and view all the answers

<p>Diminishing marginal return occurs when adding more of one input, while keeping others constant, results in smaller increases in output.</p> Signup and view all the answers

<p>The relationship between changes in inputs and changes in output when all inputs are increased proportionately. (A)</p> Signup and view all the answers

<p>True (A)</p> Signup and view all the answers

<p>Diminishing marginal returns occur when adding an additional factor of production results in a smaller increase in output.</p> Signup and view all the answers

<p>fixed</p> Signup and view all the answers

<p>Short Run Production Function = At least one input is fixed. Long Run Production Function = All inputs can be varied. Increasing Marginal Returns = Additional input leads to a larger increase in output. Diminishing Marginal Returns = Additional input leads to a smaller increase in output.</p> Signup and view all the answers

<p>Increased output due to lower operational costs. (D)</p> Signup and view all the answers

<p>False (B)</p> Signup and view all the answers

<p>An increase in rent raises the firm's production costs.</p> Signup and view all the answers

Cost advantages a firm gains by increasing production and expanding operations, leading to lower average total cost in the long run.

Lowest cost per unit at which any output can be produced in the long run.

Cost savings arising from efficient use of production methods and technology, like advanced machinery and automation.

Cost savings achieved by specialized management teams and resources improving operations and decision-making to reduce waste.

Cost advantages due to larger firms' better access to financing and favorable loan terms.

Cost savings from reduced per-unit marketing costs due to a broader customer base and greater market visibility.

Cost savings from bulk purchasing, resulting in discounts and lower raw material/input costs.

The quantity of something produced.

Some inputs, like machinery, can't be scaled down easily.

Breaking down production tasks to improve efficiency and worker productivity.

Machines specifically designed for particular parts of production processes.

Investments like research & development, advertising that benefit future production.

Cost savings for firms with various product lines.

Larger firms can create better deals with suppliers due to quantity.

Inefficient use of resources due to small scale production, especially with large machinery.

The relationship between changes in inputs and output when all inputs are increased proportionally in the long run.

When output increases at a faster rate than input increases.

When output increases at the same rate as input increases.

When output increases at a slower rate than input increases.

This is an example of a decrease in the cost of an input, which can lead to increasing returns to scale.

This could lead to increasing returns to scale, as businesses can produce more with the same amount of money.

This is unlikely to directly affect returns to scale, as it's a fixed cost that doesn't change with production.

This could lead to decreasing returns to scale, as higher costs can limit production potential.