Ch6

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Author:
christiemcmanaman
ID:
117524
Filename:
Ch6
Updated:
2011-11-17 13:23:31
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economics
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Description:
ch 6 key terms econ
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  1. accounting profit
    The difference between a firm’s total revenue and its explicit costs
  2. barrier to entry
    Any force that prevents firms from entering a new market.
  3. capital
    • Any durable goods (buildings, machinery, tools) produced by other
    • factors of production for use in a production process. Any durable
    • inputs to the production process, such as tools, machinery, and
    • buildings.
  4. constant returns to scale
    A situation in which long-run average cost does not change as scale changes.
  5. diseconomies of scale
    A situation in which long-run average cost increases as a firm’s output increases.
  6. economic (or excess) profit
    The difference between a firm’s total revenue and the sum of its explicit and implicit costs.
  7. economic loss
    An economic profit that is less than zero.
  8. economic rent
    That part of the payment for a factor of production that exceeds the owner’s reservation price, the price below which the owner would not supply the factor.
  9. economies of scale
    A situation in which long-run average cost decreases as a firm’s output increases.
  10. explicit costs
    The actual payments a firm makes to its factors of production and other suppliers.
  11. firm
    An organization that combines factors of production to produce a good or service or some combination of goods and services.
  12. implicit costs
    All the firm’s opportunity costs of the resources supplied by the firm’s owners.
  13. indivisible costs
    The cost of an indivisible factor of production.
  14. invisable factor of production
    A factor of production that must be available in some minimum amount if a productive activity, even of minimal size, is to occur at all.
  15. Long run average cost
    The lowest cost per unit that can be achieved for a given level of output when all factors of production, all costs, and the size of the firm are variable, but technology is constant.
  16. minimum efficient quantity
    The smallest quantity of output that will achieve minimum long-run average cost.
  17. normal profit
    The opportunity cost of the resources supplied by the firm’s owners; normal profit = accounting profit - economic profit.
  18. Scale
    the size of a firm relative to other possible sizes of firms serving a particular market

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