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31 Cards in this Set

  • Front
  • Back
breakeven quantity
A zero profit activity level
Output level at which short-run average costs are minimized
cost elasticity
Percentage change in total cost associated with a 1 percent change in output
cost function
The cost/output relation
cost-volume-profit analysis
Analytical technique used to study relations among costs, revenues, and profits
current cost
Amount paid under prevailing market conditions
degree of operating leverage
Percentage change in profit from a 1 percent change in output
economies of scale
Decreasing long-run average costs
economies of scope
Cost reduction from producing complementary products
explicit cost
Out-of-pocket expenditures
fixed cost
Expense that does not vary with output
historical cost
Actual cash outlay
implicit cost
Noncash costs
incremental cost
Change in cost caused by a given managerial decision
learning curve
Average cost reduction over time due to production experience
long run
Planning period with complete input flexibility
long-run cost curve
Cost/output relation for the optimal plant in the present operating environment
long-run cost functions
Basis for long-range planning
minimum efficient scale
Output level at which long-run average costs are minimized
multiplant diseconomies of scale
Cost disadvantages from managing multiple facilities in the same line of business or industry
multiplant economies of scale
Cost advantages from operating multiple facilities in the same line of business or industry
operating curves
Short-run cost relationship
opportunity cost
Foregone value associated with current rather than next-best use of an asset
planning curves
Long-run cost relationship
profit contribution
Profit before fixed charges
replacement cost
The cost of duplicating productive capability using current technology
short run
Operating period during which at least one input is fixed
short-run cost curve
Cost/output relation for a specific plant and operating environment
short-run cost functions
Basis for day-to-day operating decisions
sunk cost
Cost that does not vary across decision alternatives
variable cost
Expense that fluctuates with output