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;
30 Cards in this Set
- Front
- Back
Explicit Costs |
Direct payment of cash |
|
Implicit Costs |
Represents the inflows of cash that are forgone |
|
Economic Profit |
Takes into account implicit costs and cost of capital |
|
Implicit Cost of Capital |
Amount you could get if you sold something |
|
Accounting Profit |
TR-EC Emphasis on Implicit Costs |
|
Normal Profit |
An economic profit is equal to zero |
|
Optimal Output Rule |
When quantity at which marginal revenue equals marginal costs |
|
Marginal Revenue Curve |
Shows marginal revenue for each unit |
|
Marginal Cost Curve |
Marginal Cost for Each unit |
|
Principle of Marginal Analysis |
Every activity should continue until marginal benefit equals marginal cost |
|
Production of function |
Relationship between inputs and output |
|
Short run |
Fixed input cannot be varied but the quantity of variable input can |
|
Long run |
Quantities of all inputs can be varied |
|
Total Product Curve |
How quantity changes as the quantity of the variable input changes |
|
Marginal Product |
Increase in output that results from using one more unit of that input |
|
Diminishing returns to an input |
Marginal product declines as more input is used |
|
Total Cost |
Equal to the sum of fied cost |
|
Fixed cost |
does not depend on output |
|
Variable Cost |
Does depend on output |
|
Average Total Cost |
TC/Q |
|
U-SHaped Average Total Cost Curve |
Costs of many average total cost curves |
|
Average Fixed Cost |
Falls when output increases |
|
Average Variable Cost |
Rises with output |
|
Long-Run Average Total Cost Curve |
Relationship between output and average total cost when fixed cost has been chose to minimize total cost when fixed has been chosen to minimize average total cost |
|
Returns to scale |
Ouput increasing |
|
Constant Returns to Scale |
Flat Spot |
|
Sunk Costs |
Expenditures that have already been made and cannot be covered |
|
Monopolist |
Producer who is the sole supplier of a good without close substitutions |
|
Barrier to Entry |
How easy it is to enter an economy |
|
Natural Monopoly |
Control of a natural resource or input |