Econ exam 3 Flashcards
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Explicit Costs
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monetary payments so a business can function, wages and utilities, office supplies, traveling expenses
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Implicit Costs
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Opportunity costs of owned resources
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Economic Costs
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sum of explicit + implicit
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Total Revenue
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Price x Quantity
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Average Product
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the amount of output produced per unit of a resource employed
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Fixed Costs
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Costs that dont change with the amount of output produced
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Total Costs
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Total Fixed Costs - Total Variable Costs
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Zero Accounting Profit
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means the value of economic profit is negative
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Marginal Product
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additional output produced as a result of utilizing one more unit of a variable resource
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Increasing Marginal Returns
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a characteristic of production whereby the marginal product of the next unit of a variable resource utilized is greater than that of the previous variable resource
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Decreasing Marginal Returns
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marginal product of the next unit of a variable resource utilized is less than that of the previous variable resource
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Positive economic profits
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encourage more firms to enter the market to produce goods and services
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Short run
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a period of time in which at least one input of production is fixed
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ATC
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TC/Q
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AFC
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TFC/Q
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Economic Profit
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TR-(Explicit + Implicit)
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AVC
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TVC/Q
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Accounting Profit
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TF-Explicit Costs
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Long Run
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Period of time in which all inputs of production are variable
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Marginal Cost
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can be increasing or decreasing and still above or below the average cost
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diseconomies of scale
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forces that cause larger firms and governments to produce goods and services at increased per unit costs
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minimum-efficiency scale
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how many units you need to sell to reach the minimum long run ATC
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Economies of Scale
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Condition in which the long-run ATC of production decreases as production increases
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Perfect Competition
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makred strucutre characterized by the interaction of large numbers of buyers and sellers, in which the sellers produce a standardized, or homogeneous product
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Marginal Revenue
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additioal revenue associated with the production of an additional unit
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Profit
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total reveue - total cost or average revenue - ATC x output
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Productive Efficiency
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using the fewest resources to produce a good or service
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Zero economic profit
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the revenue needed for a company to break even and meet operating costs without a loss
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Consumer Surplus
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1/2 x output x change in price
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Deadweight loss
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value of the economic surplus that is foregone whena market is not allowed to adjust to its competititve equilibrium
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Price Discrimination
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The practice of selling the same good or service to different consumers at diff prices
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Normal Profit
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level of profit that occurs when total revenue is equal to total lost
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Dynamic efficiency
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the development of new products, reducing costs and improving existing products
