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24 Cards in this Set
- Front
- Back
- 3rd side (hint)
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Marginal Cost (MC)
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The additional cost of producing one more unit of output
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Total fixed Cost (TFC)
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Costs that must be paid whether a firm produces or not
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Total Variable Costs (TVC)
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Coust that rise or fall as production rises or falls
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Total Costs (TC)
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The sum of total variable and total fixed costs
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Short Run Average Total Costs (SRATC)
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The total cost of production divided by the total quantity of output producded when at least one resource is fixed.
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Scale
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Size; all resources change when scale changes
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Long-run average total Cost (LRATC)
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The lowest-cost combination of resources with which each lovel of output is produced when all resources are available.
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Economic Profit
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Total revenue less total costs, including all opportunity costs
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Accounting Profits
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Total revenue less total costs, excluding all opportunity costs
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Negative Economic Profit
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Total Revenue is less than total costs when total costs include opportunity costs
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Zero Economic Profit
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Total revenue is equal to total costs when total costs include all opportunity costs
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Normal Accounting Profits
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Zero Economic Profits--the Normal Rate of Return (e.g., interest rate from the bank)
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Positive Economic Profit
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Total Revenue is greater than total costs when total costs include all opportunity costs.
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Total Physical Product (TPP)
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The max output that can be produced when successive units of a variable resource are added to fixed amounts of other resources.
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Law of Deminishing Marginal Returns
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When succive equal amounts of a variable resource are combined with a fixed amoutn of another resourced, marginal increases in output that can be attributed to each additional unit of the variable resource will eventuall decline.
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Average Physical Product
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Output per unit of a resource
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Marginal Physical Product
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The additional quantity that is produced when one additional unit of a resource is used in combination with the same quantity of all other resources.
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Average Total Cost (ATC)
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Per unit cost; total costs divided by the total output.
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Marginal Revenue
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The amount the firm receives for selling one more unit of its product.
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Long Run
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The time period over which all factors of production can be varied
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Short Run
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The time period over which at least one factor of production is fixed.
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Perfect Competition
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A market structure in which many firms produce identical products and entry is easy. Each firm is a price taker. In the long run, firms in this structure earn normal profits
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Allocative efficiency |
A situation in which the limited resources of a firm are allocated in accordance with the wishes of consumers. SR AND LR |
An allocative my efficient economy produces an "optimal mix" of commodities.
A firm is allocative my efficient when it's price is equal to its marginal cost (P=MC) |
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Productive (techincal) effiecieny |
Occurs when the economy is operating at its production possibilities frontier. This takes place when production of goods is achieved at its lowest possible cost. A firm is productively efficient when it is producing at at the base of its avrrage total cost curve (MC=ATC) LR ONLY |
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