Econ Iii

Front 1

Explicit Costs

Back 1

Outgoing payments for the use of resources needed to produce the good or service

Front 2

Examples of Explicit Costs

Back 2

Electricity, Employee Wages, Rent, Supplies, etc

Front 3

Implicit Costs

Back 3

Owner supplied resources used in producing the good or service and forgone costs associated with them. "Opportunity costs" of owning a business

Front 4

Examples of Implicit Costs

Back 4

Salaries forgone, Interest Forgone, Normal Profit

Front 5

Short Run

Back 5

Fixed. In the SR firms can not change the size of their plant, factory, or facility. The resource is fixed. Other resources like labor and supplies or material can be altered.

Front 6

Long Run

Back 6

In the long run, the plant or factor can vary. We can build onto it, build another one in a different location, or even close a factory. All resources become variable in the long run.

Front 7

Examples of Long Run

Back 7

1). JCCC Builds a new classroom Building
2). AMC Theater adds a balcony

Front 8

Examples of Short Run

Back 8

1). China Starr adds second buffett station

Front 9

Law of Diminishing Returns

Back 9

The more of one resource you add to some fixed resource (land) at some point the additional output you get diminishes

Front 10

Fixed Costs

Back 10

Fixed costs are costs that don't change with the level of production

Front 11

Examples of Fixed Costs

Back 11

rent, insurance premiums, salaried employees, bank loans on capital, fixed taxes, depreciation, leases, salaries

Front 12

Variable Costs

Back 12

Costs that vary with output

Front 13

Examples of Variable Costs

Back 13

Laborers (hourly wages), Utilities, Supplies, Advertising, transportation

Front 14

Productive Efficiency

Back 14

Occurs when firms are employing the least cost methods of production. This happens when price of the product is equal to the minimum of the ATC. P=Min ATC.

Front 15

Allocative Efficiency

Back 15

means society is getting enough of the product. this occurs when p=mc