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24 Cards in this Set
- Front
- Back
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total revenue |
the amount a firm receives for the sale of it's output (PxQ) |
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total cost |
the market value of the inputs a firm uses in production |
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Profit |
total revenue minus total cost |
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explicit cost |
input costs that require an outlay of money by the firm |
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implicit costs |
input costs that do not require an outlay of money by the firm (opportunity cost) |
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economic profit |
total revenue minus total cost, including both explicit and implicit costs |
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accounting profit |
total revenue minus total explicit costs |
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production function |
the relationship between quantity of inputs used to make a good and the quantity of output of that good |
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marginal product |
the increase in output that arises from an additional unit of input (change in output/change in quantity) |
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diminishing marginal product |
the property whereby the marginal product of an input declines a the quantity of the input increases |
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fixed costs |
costs that do not vary with the quantity of out produced |
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variable costs |
costs that vary with the quantity of output produced |
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average total cost |
total costs divided by the quantity of output |
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average fixed costs |
fixed cost divided by the quantity of output |
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average variable costs |
variable costs divided by the quantity of output |
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marginal cost |
the increase in total cost that arises from an extra unit of production (change in cost/change in quantity) |
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marginal cost curve |
upward sloping (demonstration of diminishing marginal product) |
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average total cost curve |
U shaped |
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efficient scale |
the quantity of output the minimizes average total cost |
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Whenever marginal cost is less than average total cost? |
Average total cost is falling |
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Whenever marginal cost is greater than average total cost? |
Average total cost is rising |
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economies of scale |
the property whereby long-run average total cost falls as the quantity of output increases |
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diseconomies of scale |
the property whereby long-run average total cost rises as the quantity of output increases |
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constant returns to scale |
property whereby long-run average total cost stays the same as quantity of output changes |
