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### 19 Cards in this Set

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 Profit? Total Revenue - Total Cost Π= TR-TC = (P-AC)Q = (AR-AC)Q Profit maximization vs. revenue maximization Revenue Maximization = Maximizing the amount you make from selling a good/service Profit Maximization = Maximizing the amount you make when total cost is added. Total revenue The amount a firm recives for the sale of it's output Total cost The market value of the inputs a firm uses in production. Explicit cost Imput cost that require an outlay of money by the firm. Implicit cost Input costs that do not require an outlay of money by the firm. Opportunity Cost Whatever must be given up to obtain some item Fixed Cost Cost that do not vary with the quantity of output produced Variable Cost Costs that do vary with the quantity of output produced 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. Diminishing Marinal Product The property whereby the marginal product of an input declines as the quantity of the input increases. Production function-cost relationship As production per input goes up, the cost per output unity goes down. Profit increases. Total, average, and marginal measurements What you want to find out. The total/average/marginal number of ties at Wal-Mart Efficient Scale The quantity of output that minimizes average total cost. Characteristics of a Competitive Market Many Buyers Many Sellers Homogenous Goods Free entry and exit into market Sunk Cost A cost that has already been committed and cannot be recovered. Shut Down Decision: Short Run: TR vs. TVC If Total Revenue is greater than Total Variable Cost, short run should produce because they'd lose less and you never know when the market might go boom. Shut Down Decision: Short Run: P vs. AVC Is Average Variable Cost is less than price, short run company should produce to cover variable cost.