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