1. Copyright © Texas Education Agency, 2011. All rights reserved.

2. Copyright Texas Education Agency, 2011. All rights reserved. 2 “Copyright and Terms of Service Copyright © Texas Education Agency. The materials found on this website are copyrighted © and trademarked ™ as the property of the Texas Education Agency and may not be reproduced without the express written permission of the Texas Education Agency, except under the following conditions: 1)Texas public school districts, charter schools, and Education Service Centers may reproduce and use copies of the Materials and Related Materials for the districts’ and schools’ educational use without obtaining permission from the Texas Education Agency; 2) Residents of the state of Texas may reproduce and use copies of the Materials and Related Materials for individual personal use only without obtaining written permission of the Texas Education Agency; 3) Any portion reproduced must be reproduced in its entirety and remain unedited, unaltered and unchanged in any way; 4) No monetary charge can be made for the reproduced materials or any document containing them; however, a reasonable charge to cover only the cost of reproduction and distribution may be charged. Private entities or persons located in Texas that are not Texas public school districts or Texas charter schools or any entity, whether public or private, educational or non-educational, located outside the state of Texas MUST obtain written approval from the Texas Education Agency and will be required to enter into a license agreement that may involve the payment of a licensing fee or a royalty fee.

3.  What kind of costs should organizations consider?  When can profit be maximized?  Is there a point at which it is not cost effective to hire one additional person? Copyright © Texas Education Agency, 2011. All rights reserved. 3

4.  The cost of operating a facility such as a store or facility Copyright © Texas Education Agency, 2011. All rights reserved. 4

5.  A cost that does not change, no matter how much of a good is produced Copyright © Texas Education Agency, 2011. All rights reserved. 5  Costs that rise or fall depending on the quantity produced

6.  Fixed costs and variable costs added together Copyright © Texas Education Agency, 2011. All rights reserved. 6 TC = FC + VC

7.  The change in output from hiring one more worker Copyright © Texas Education Agency, 2011. All rights reserved. 7

8.  A level of production in which product of labor decreases as the number of workers increases Copyright © Texas Education Agency, 2011. All rights reserved. 8  A level of production in which the marginal product of labor increases as the number of workers increases

9.  The additional cost of producing one more unit Copyright © Texas Education Agency, 2011. All rights reserved. 9

10.  The additional income from selling one more unit of a good Copyright © Texas Education Agency, 2011. All rights reserved. 10

11.  Marginal Costs (MC) = Marginal Revenue (MR) Copyright Texas Education Agency, 2011. All rights reserved. 11

12.  Provide examples of fixed costs.  Provide examples of variable costs.  When is a producer’s profit maximized?  What causes diminishing marginal returns?  Why are some employees considered variable costs while others are considered fixed costs? Copyright Texas Education Agency, 2011. All rights reserved. 12