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### 20 Cards in this Set

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• Back
 Total Revenue The amount a firm recieves for the sale of its output (Ex. I sell 10 cookies for \$2 each, TR=\$20) Total Cost The market value of the inputs a firm uses in production (price of what goes into product) Profit Profit= Total Revnue- Total Cost Explicit Costs Input costs that require an outlay of money by the firm (You pay \$10 for flour to make cookies, \$10 is the explicit cost) Implicit Costs Input costs that do not require an outlay of money by the firm (I could be making \$100/hour working w/ computers but instead im making cookies, that money is the impilict cost) Economic Profit TR - TC, including both explicit and implicit costs Accounting Profit TR - Total Explicit Costs Production Function The relationship between quantity of inputs used to make a good and the quantity of output of that good Marginal Product The increase in output that arises from an additional unit of input Diminshing Marginal Product The property whereby the marginal product of an input declines as the quantity of the input increases Fixed Costs Costs that do not vary w/ the quantity of out produced (Ex. Rent) Variable Costs Costs that do vary with the quantity of output produced Average Total Cost Total Costs Divided by the quantity of output Average fixed costs Fixed costs divided by the quantity of output Average Variable Cost Variable costs divided by the quantity of output Marginal Cost The increase in total cost that arises from an extra unit of production Efficient Scale The quantity of output that minimizes average total cost Economies of Scale The property whereby long-run average total cost falls as the quantity of output increases Constant Returns to Scale The property whereby long-run average total cost stays the same as the quantity of output changes Diseconomies of Scale The property whereby long-run average total cost rises as the quantity of output increases