# Elasticity/Production Cost

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 Author: Kencollins08 ID: 134016 Filename: Elasticity/Production Cost Updated: 2012-02-09 11:29:53 Tags: Econ1 Folders: Description: Elasticity/Production cost Show Answers:

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1. Price Elastic
• is a more than 1 percent change in Qd in response to a 1 percent change in price (P,TR inverse)
• Ed > 1
2. To calculate Elasticity (Ed)
3. Price Inelastic
• is a less than 1 percent change in Qd in response to a 1 percent change in price (P,TR direct)
• 0<Ed<1
4. Unit Elastic
• is a 1 percent change in Qd in response to a 1 percent change in price (TR, unchanged,TR maximized)
• Ed=1
5. Perfectly Elastic
An extreme case in which the demand curve is horizontal and the elasticity coefficient equals infinity
6. Perfectly Inelastic
An extreme case in which the demand curve is vertical and the elasticity coefficient equals 0
7. Explicit Costs
the actual payments a firm makes to its suppliers of inputs
8. Implicit Costs
the firms oppertunity costs of all the resources supplied by the firms owners
9. TFC, TVC, TC
TC = TFC+TVC
10. TR
TR=QxP
11. Accounting Profit
TR - Explicit Costs
12. Economic Profit
TR - (Explicit + Implicit)
13. ATC, AVC, AFC
• ATC=TC/Q
• AVC=TVC/Q
• AFC=TFC/Q
14. Marginal Cost
• or,

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