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19 Cards in this Set
- Front
- Back
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Def: Firm |
Organisation formed by entrepreneurs who bring tgt FoP |
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Def: Industry |
Group of firms |
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Def: Market |
Producers and consumer transact |
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Def: Short Run |
- 1 FoP is fixed - o/p increase b/c variable factors |
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Def: Variable factor |
Qty of inputs |
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Def: Fixed factors |
Existing bldings and machinery |
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Def: Long run |
All inputs varied xcpt technology (c.p) |
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Eqn: Economic cost |
Explicit cost + Implict cost |
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Def: Explict cost |
Factors not owned by firm |
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Def: Implicit cost |
Factors alrd own by firms |
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Def: Law of Diminishing Marginal Returns |
As more units of a variable factor are added, there comes a point where additional o/p fr. additional units of variable factors will diminish |
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Short-run production: 3 stages |
1. Total o/p ^ & ^ marginal o/p 2. Total o/p ^ & d/c marginal o/p 3. Total o/p d/c & negative marginal o/p |
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Short-run costs: Fixed cost |
Does not vary w/ o/p lvl |
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Short-run costs: Variable costs |
Vary w/ o/p |
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Eqn: Total cost |
= Total fixed cost + total variable cost |
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Eqn: Avg Total Cost |
=TC/Q = AFC + AVC |
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Eqn: Marginal cost |
MCn = TCn - TCn-1 |
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SR cost curve: AFC |
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SR cost curve: AVC |
1. Ushaped 2. Increasing marginal returns 3. Following decreasing marginal returns |
