econ 2020
Terms
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- what are explicit costs
- the opportunity costs of production that require a monetary payment
- implicit costs
- the opportunity costs of production that do not require a monetary payment
- profits
- the difference between total revenue and total cost
- accounting profits
- total revenues minus total explicit costs
- economic profits
- total revenue minus explicit and implicit costs
- sunk costs
- costs that have been incurred and cannot be recovered
- short run
- a period too brief for some production inputs to be varied
- long run
- a period over which all production inputs are vaiable
- total product (TP)
- the total output of a good produced by the firm
- marginal product
- the change in total output of a good that results from a unit change in input
- diminishing marginal product
- as a variable input increases, with other inputs fixed, a point will be reached where the additions to output wil eventually decline
- fixed costs
- costs that do not vary with the level of output
- variable costs
- costs that vary witht he level of output
- total variable cost (TVC)
- the sum of the firm's variable costs
- total cost (TC)
- the sum of the firm's total fixed costs and total varialbe costs
- average total cost (ATC)
- a per unit cost of peration; total cost divided by output
- average fixed cost (AFC)
- a per unit measure of fixed costs; fied costs divided by output
- average variable cost (AVC)
- a per unit measure of variable costs; variable costs divided by output
- marginal cost
- the change in total costs resulting from a one unit change in output
- economies of scale
- occur in an output range where LRATC falls asw output increases
- constant returns to scale
- occur in an output range where LRATC does not change as output varies
- diseconomies
- occur in an output range where LRATC rises as output expands
- minimum efficient scale
- the output level where economies of scale are exhausted and constatnt returns to scale begin