Lesson 19. Costs in the Long Run

Questions
1. Are there fixed costs in the long-run? Explain briefly .
2. Are fixed costs also sunk costs? Explain.
3. What are diminishing marginal returns as they relate to costs?
4. Which costs are measured on per-unit basis: fixed costs, average cost, average variable cost, variable costs, and marginal cost?
5. What is a production technology?
6. In choosing a production technology , how will firms react if one input becomes relatively more expensive?
7. What is a long-run average cost curve?
8. What is the difference between economies of scale, constant returns to scale, and diseconomies of scale?
9. What shape of a long-run average cost curve illustrates economies of scale, constant returns to scale, and diseconomies of scale?
10. Why will firms in most markets be located at or close to the bottom of the long-run average cost curve?
Word definition
marginal revenue the additional revenue gained from selling one more unit
market structure the conditions in an industry , such as number of sellers, how easy or difficult it is for a new firm to enter, and the type of products that are sold
perfect competition each firm faces many competitors that sell identical products
price taker a firm in a perfectly competitive market that must take the prevailing market price as given
shutdown point level of output where the marginal cost curve intersects the average variable cost curve at the minimum point of A VC; if the price is below this point, the firm should shut down immediately
economies of scale- the long-run average cost of producing output decreases as total output increases
explicit costs- out-of-pocket costs for a firm, for example, payments for wages and salaries, rent, or materials

Grammar









Test

Count/Non-Count Food Portative

1. I need _______ eggs for the Easter egg hunt. A) a gallon B) a quart of C) half a dozen D) a tea spoon of
2. I need a _______ of ground beef to make hamburgers for the picnic. A) pint B) box C) head D) pound and a half
3. We need a _______ of rice to make our special chicken and rice dish. A) box B) gallon C) loaf D) teaspoon
4. The _______ of toothpaste are located in the health and beauty section of the supermarket. A) quarts B) tubes C) pints D) sticks
5. Pick up a _______ of soda for the party tonight. A) head B) jar C) bag D) six-pack
6. Order _______ Swiss cheese at the deli counter. A) a pint B) half a pound C) a quart D) a jar
7. This recipe needs a _______ of salt. A) teaspoon B) loaf C) six-pack D) stick
8. Go get a _______ of bananas in the produce section at the front of the store. A) head B) dozen C) bunch D) pint
9. We need a _______ of orange juice for tomorrow morning. A) pound B) quart C) bag D) stick
10. Buy a _______ of chocolate chip cookies for dessert. A) bag B) half a gallon C) teaspoon D) loaf