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### 13 Cards in this Set

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 Total Utility The aggregate satisfaction gained from consuming successive quantities of a good. Marginal Utility Change in TU resulting from consumption of one extra unit of a given commodity. Equi-Marginal Rule Consumer Equilibrium is reached when MU of the last dollar spent on each commodity is equal. MUa = MUb ---- ----- \$a \$b Accounting VS Economic Costs ACCOUNTING: monetary costs involved in production (explicit) ECONOMIC: returns to all factors of production regardless of ownership, includes opportunity cost for resources owned by the firm itself. (Explicit+Implicit) Law of Diminishing Returns As additional units of a variable factor are applied to fixed factors, the resulting increase in output will, after a certain point, be successively smaller. Economies of Scale Cutting AC as firm gets bigger resulting from spreading fixed costs over more units of output. = downwards-sloping LONGRUN AC curve Normal/Sub/Super-normal profit PROFIT= difference between AR and AC at Quantity NORMAL: sufficient to keep in business. AR=AC SUPERNORMAL: More than sufficient - AR>AC SUBNORMAL: AR