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......... Important concepts and technical terms Match each lettered concept with the appropriate numbered phrase: The specification of the maximum output that can be produced from any given amount of inputs. a The total cost of producing a given output level when the firm is able to adjust all inputs optimally. The period long enough for the firm to adjust all its inputs to a change in conditions. ort-Fun;m The output level at which further economies of scale become unimportant for the Individual firm and the average cost curve first becomes horizontal. The situation in which long-run average costs increase as output rises. The increase in short-run total costs (and in short-run Long-run m variable costs) as output is increased by one unit. of The cost per unit of producing a given output level when the firm is able to adjust all inputs optimally. B Costs that change as output changes. The situation where, beyond some level of the variable input, further increases in the variable input lead to a e steadily decreasing marginal product of that Input. 10 The increase in long-run total costs if output is a permanently raised by one unit. 11 Costs that do not vary with output levels. % 12 The situation when long-run average costs are constant as C output rises. 13 The situation when long-run average costs decrease as output rises. rv 14 The period in which the firm can make only partial adjustment of its inputs to a change in conditions. k Exercises . 79 (b) For each level of output, state which production technique should be adopted by the firm. 1 A firm making toffees has a choice between (c) Suppose that the price of labour input increases to three production techniques, each using different f300 per unit/week, but the price of capital combinations of labour input and capital input, as remains constant. In what way would you expect shown in Table 7-1. the firm's choice of technique to be affected by this Suppose labour costs $200 per unit/week and capital change in relative prices? Input costs $400 per unit/week. (d) With the new labour cost, state which production (a) Calculate total cost for each level of output. technique should be adopted for each output level and calculate total cost. table in