Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
11 Cards in this Set
- Front
- Back
|
Quantity and combination of inputs it needs to produce its product;And how much those inputs cost |
To calculate costs, a firm must know two things |
|
|
Fixed cost |
Any cost that does not depend on the firms level of output. These costs are incurred even if the firm is producing nothing. There are no fixed costs in the long run. |
|
|
Variable cost |
cost that depends on the level of production chosen. |
|
|
Total cost (TC = TFC + TVC) |
Fixed cost plus variable cost |
|
|
Total Fixed Costs (TFC) or Overhead |
The total of all costs that do not change with output even if output is zero |
|
|
Sunk cost |
Firms have no control over fixed costs in the short run |
|
|
Average fixed cost |
Total fixed cost divided by the number of units of output; a per-unit measure of fixed costs |
|
|
Spreading overhead |
The process of dividing total fixed costs by more units of output. Average fixed cost declines as quantity rises |
|
|
Total variable cost |
The total of all costs that vary with output in the short run |
|
|
TVC curve |
A graph that shows the relationship between total variable cost and the level of a firm’s output |
|
|
1) Techniques of production that are available2) The prices of the inputs required by each technology |
At any given point of output, TVC depends on |
