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PS cost of production - Problem Set Costs of Production 1 A...

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Problem Set Costs of Production 1. A production function shows the maximum _______________________ that can be produced with __________________________________; OR, seen in reverse, the _____________________ amount of ____________________ that are needed to produce ___________________________________________. 2. Name at least two things that cause, ceteris paribus, a firm's production function to increase, that is to be able to produce more with the same resources? 3. The market value of all of the resources used in producing a good or service is called: 4. The costs for a firm that increase as output increases and decrease as output decreases (in the short run) are called: 5. The costs that the firm incurs in the short run regardless of how much it produces are called: 6. Suppose that you are a small producer who is making cupcakes. You have rented a small space in a strip mall with ovens and other bakery equipment and employ a few workers. You have been in business for about a year. a. What decisions you must make in the short run? b. What decisions can you only make in the long run?
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