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20 Cards in this Set
- Front
- Back
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Total Revenue
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The amount a firm receives for the sale of its output
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Total Cost
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The market value of the inputs a firm uses in production
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Profit
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Total revenue minus total cost
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Explicit Costs
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Input costs that require an outlay of money by the firm
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Implicit Costs
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Input costs that do not require an outlay of money by the firm
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Economic Profit
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Total revenue minus total cost, including both explicit and implicit costs
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Accounting Profit
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Total revenue minus total explicit cost
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Production Function
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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
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The increase in output that arises from an additional unit of input
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Diminishing Marginal Product
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The property whereby the marginal product of an input declines as the quantity of the input increases
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Fixed Costs
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Costs that do not vary with the quantity of output produced
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Variable Costs
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Costs that do vary with the quantity of output produced
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Average Total Cost
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Total cost divided by the quantity of output
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Average Fixed Cost
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Fixed costs divided by the quantity of output
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Average Variable Cost
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Variable cost divided by the quantity of output
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Marginal Cost
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The increase in total cost that arises from an extra unit of production
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Efficient Scale
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The quantity of output that minimizes average total cost
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Economies of Scale
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The property whereby long-run average total cost falls as the quantity of output increases
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Diseconomies of Scale
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The property whereby long-run average total cost rises as the quantity of output increases
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Constant Returns to Scale
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The property whereby long-run average total cost stays the same as the quantity of output changes
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