Short-Run Costs 7.3-2- Marie Smith Flashcards Preview

Econ 2106 Exam 2 > Short-Run Costs 7.3-2- Marie Smith > Flashcards

Flashcards in Short-Run Costs 7.3-2- Marie Smith Deck (12)
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1
Q

What will the variable cost curve tell us?

A

how much $ you have to spend on labor in order to produce a given quantity of output.

2
Q

On a two dimensional graph, variable cost will be shown on which axis?

A

Variable cost is on the vertical axis.

3
Q

What will be on the horizontal axis of a graph depicting the variable cost curve?

A

Output ( T P ) is shown on the horizontal axis

4
Q

What is the point of inefficiency?

A

It is the point where you can produce the same amount of output with less $ spent on labor.

5
Q

What does the point of inefficiency look like on the graph?

A

It is the point wher the variable cost curve begins to move backward.

6
Q

Are inefficient points included or excluded on a graph showing the variable cost curve?

A

They are excluded.

7
Q

What happens to cost when productivity goes up?

A

Cost goes down.

8
Q

What happens to productivity when cost rises?

A

Productivity goes down.

9
Q

What kind of relationship is there between productivity and cost?

A

They are inversely related.

10
Q

At what point does the variable cost cuvr go vertical?

A

At the maximum point.

11
Q

What defines the maximum point?

A

This is the point at which no matter how much $ you spend on labor, you will not increase the output.

12
Q

The relationship between cost and output are represented by what?

A

The variable cost curve.