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24 Cards in this Set

  • Front
  • Back
explicit cost
cost that involves actually laying out money
implicit cost
does not require an outly of money; it is measured by the value, in dollar terms, of the benefits that are forgone
accounting profit
business's revenue minus the explicit cost and depreciation
economic profit
business's revenue minus the opportunity cost of its resources. it is usually less than the accounting profit
capital
value of a business's assets-equipment, buildings, tools, inventory, and financial assets.
Marginal cost (MC)
additional cost incurred by doing one more unit of that activity
marginal cost curve
shows how the cost of undertaking one more unit of an activity depends on the quantity of that activity that has already been done
marginal benefit
the additional benefit derived from undertaking one more unit of that activity
sunk cost
a cost that has already been incurred and is nonrecoverable. a sunk cost should be ignaored in decisions about future actions
interest rate
price, calculated as a percentage of the amount borrowed, charged by the lender.
present value
of $1 realized one year from now is equal to $1/(1+r): the amount of money you must lend out today in order to have $1 in one year. it is the value to you today of $1 realized one year from now
net present value
present value of current and future benefits minus the present value of current and future costs.
explicit cost
cost that involves actually laying out money
implici cost
does not require an outly of money; it is measured by the value, in dollar terms, of the benefits that are forgone
accounting profit
business's revenue minus the explicit cost and depreciation
economic profit
business's revenue minus the opportunity cost of its resources. it is usually less than the accounting profit
capital
value of a business's assets-equipment, buildings, tools, inventory, and financial assets.
Marginal cost (MC)
additional cost incurred by doing one more unit of that activity
marginal cost curve
shows how the cost of undertaking one more unit of an activity depends on the quantity of that activity that has already been done
marginal benefit
the additional benefit derived from undertaking one more unit of that activity
sunk cost
a cost that has already been incurred and is nonrecoverable. a sunk cost should be ignaored in decisions about future actions
interest rate
price, calculated as a percentage of the amount borrowed, charged by the lender.
present value
of $1 realized one year from now is equal to $1/(1+r): the amount of money you must lend out today in order to have $1 in one year. it is the value to you today of $1 realized one year from now
net present value
present value of current and future benefits minus the present value of current and future costs.