Key Words For Econ

Front 1

Economic (opportunity) Cost

Back 1

value or worth a resource would have in its best alternative use

Front 2

Explicit Costs

Back 2

monetary payments made to labor, services, materials, fuel, transportation services

Front 3

implicit costs

Back 3

opportunity costs of using self owned, self employeed resources

Front 4

normal profit

Back 4

cost of doing business

Front 5

economic profit

Back 5

total revenue less economic costs (explicit and implicit costs)

Front 6

short run

Back 6

Period too brief for firm to alter its plant capacity, but long enough to change degree in which plant is used

Front 7

long run

Back 7

period long enough for factory to adjust quantities of all resources that it employs, including plant capacity

Front 8

law of diminishing returns

Back 8

as more of variable resource is added to fixed resource marginal product of variable resource will eventually decrease

Front 9

economies of scale

Back 9

reductions in average total cost of producing a product as the firm expands the size of plant in the long run

Front 10

diseconomies of scale

Back 10

increases in the average total cost of producing a product as the firm expands the size of its plant

Front 11

minimum efficient scale

Back 11

lowest level of output at which firm can minimize long-run average costs

Front 12

natural monopoly

Back 12

Average total cost is minimized when only one firm produces particular good or service

Front 13

pure competition

Back 13

very large number of firms producing standardized product. New firms can enter or exit the industry very easily (agri.)

Front 14

pure monopoly

Back 14

one firm is the sole seller of a product or service. Entry of additional firms is blocked (electricty)

Front 15

monopolistic competition

Back 15

large number of sellers producing differentiated products. entry and exit easy (clothing)

Front 16

oligopoly

Back 16

only a few sellers of standardized or differentiated product. each firm is affected by decisions of its rival

Front 17

price taker

Back 17

competitive firm that cannot change market price only adjust to it

Front 18

break-even point

Back 18

point at which firm makes a normal profit but not an economic profit

Front 19

monopolistic competition

Back 19

large number of sellers; differentiated products; easy entry and exit from industry

Front 20

product differentiation

Back 20

one firm's product is distinguished from competing products by means of design, related services, quality, location, or other attributes (except price)