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17 Cards in this Set
- Front
- Back
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Short Run Production
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At least one fixed input
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Long Run in Production
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Long enough to vary all inputs
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Profit
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Total Revenue - Total Cost
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Explicit Costs
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Actual dollar outlay
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Implicit Costs
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Opportunity cost of owner supplied resources not actual dollar outlay
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zero economic profit
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okay covering all explicit and implicit costs.
Called normal return/Normal profit |
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Economic profit > 0
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doing better than next best alternative, covering explicit and implicit costs and still making $
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Economic Profit < 0
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Not covering all costs
Doing worse than next best alternative. |
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Law of Diminishing Marginal Returns
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As more of a variable input is added to a production in conjunction with a fixed input, the extra output obtained will (marginal product) will start to decline.
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Marginal Product
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The extra output obtained from one more additional unit of input.
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Marginal Productivity
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The change in total product output for a given change in input usage.
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Average Product (AP)
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Total Product/Input
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Fixed Costs
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costs that do not change as output changes
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Variable Costs
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do change as output changes
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Total Costs
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Sum of fixed costs and variable costs
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Marginal Costs
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How TC changes when output changes. The cost of making one more unit of output.
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Marginal Revenue
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Revenue from selling one more unit
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