# Micro Final

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1. Marginal product cost
(change in quantity of output produced by one additional unit of labor)
• Change in quantity/change in quantity of labor
• MPL=change in Q/change in L
2. Total cost
• sum of the fixed cost and the variable cost of producing that quantity of output
• total cost=fixed + variable cost
• TC=FC+VC
3. Marginal cost
• change in total cost generated by one additional unit of output
• change in total cost/change in quantity of output
• MC=change in TC/change in Q
4. Average total cost
• total cost divided by quantity of output produced
• ATC=total cost/quantity of output (TC/Q)
• (FC+VC)/Q
5. Average fixed cost
• fixed cost divided by the quantity of output, also known as the fixed cost per unit of output
• fixed cost/quantity of output
• FC/Q
6. Average variable cost
• variable cost divided by the quantity of output, also known as variable cost
• variable cost/quantity of output
• VC/Q
7. Minimum cost
• average total cost = marginal cost
• marginal cost is less than average total cost and average total cost is falling
• at output greater than the minimum cost output, marginal cost is greater than average total cost and average total cost is rising
8. Long run ATC curve
relationship between output and average total cost when fixed cost has been chosen to minimize average total cost
9. Increasing returns to scale
long run ATC declines as output increases
10. Decreasing returns to scale
long run ATC increases as output increases
11. Fixed cost
• cost that doesn't depend on the quantity of output produced
• FC
12. Variable cost
• cost the depends on the quantity of output produced
• VC
13. Marginal revenue
• change in total revenue generated by an additional unit of output
• change in total revenue/change in quantity of output
• change in TR/change in Q
14. Total revenue
• P x Q
• total revenue=profit x quantity
15. Profit=
• TR-TC
• total revenue-total cost
16. Price taking firm
• maximized by producing the quantity of output at which the market price is equal to the marginal cost of the last unit produced
• P=MC
• marginal revenue=market price
17. Optimal output rule
profit is maximized by producing the quantity of output at which the marginal revenue of the last unit produced is equal to its MC
18. Marginal revenue cost
• shows how marginal revenue varies as output varies
• individual firm faces a horizontal, perfectly elastic demand curve for its output- an individual demand curve for its output that is equivalent to its marginal revenue
19. TR > TC
profitable
20. TR=TC
breaks even
21. TR < TC
loss
22. P > ATC
profitable
23. P = ATC
breaks even
24. P < ATC
loss

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 Author: bigtitties420 ID: 252819 Filename: Micro Final Updated: 2013-12-12 19:03:44 Tags: MICRO Folders: Description: Micro Show Answers:

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