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