Name _________________________ Class _______________ Date _______________
CHAPTER
5
S
2
GUIDED READING AND REVIEW
Costs of Production
2
ECTION
A. As You Read
Directions: As you read Section 2, complete each sentence. Then
apply your knowledge to the Guiding Question:
How can a producer maximize profits?
1. A basic decision business owners must make about labor
is
to hire.
2. Worker specialization saves
more
, makes workers
, and increases
per worker.
This allows a firm to enjoy
.
3. At diminishing marginal returns, adding an extra worker
causes
to go up at a lower rate.
4. Two examples of fixed costs are
and
5. Labor is a variable cost because workers’
.
can change.
6. To figure out its profit, a firm subtracts
from
.
B. Reviewing Key Terms
Directions: Define the following terms in your own words. Use
complete sentences.
7. marginal product of labor
8. total cost
9. marginal cost
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