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17 Cards in this Set

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