# Econ chapter 12

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1. Marginal cost
• The additional cost resulting from a one unit increase in output.
• equation: MC= ^TC
2. Total cost
• the sum of all costs of inputs used by a firm in production
• equation: TC = FC + VC
3. Average total cost
• total cost per unit of production
• equation: ATC= AFC + AVC
• = TC/Q
4. Fixed cost
• cost that is already spent and cannot be recovered. It exists only in the short run
• equation: FC
5. Average fixed cost
• fixed costs per unit of production
• equation: AFC = FC/Q
6. Variable cost
• Costs that vary with production
• equation: VC
7. average variable cost
• variable costs per unit of production
• equation: AVC= VC/Q
8. production
the name givent to that transformation of factors into goods and services
9. firm
• an economic institution that transforms factors of production into goods and services. it
• 1 organizes factors of production
• 2 produces goods
• 3 sells produced goods to individuals, businesses or government
10. accounting Profit
total revenue - total cost
11. total cost for economists
explicit payments to the factors of production plus the opportunity cost of the factors provided by the owners of the firm
12. total revenue for economists
the amount a firm receives for selling its product or service plus any increase in the value of the assets owned by the firm.
13. economic profit
(explicit and implicit revenue) - (explicit and implicit cost)
14. long run decision
a firm chooses among all possible production techniques
15. short-run decision
the firm is constrained in regard to what production decisions it can make, it has fewer options in this decision comapired to long run
16. production table
a table showing the output resulting from various combinations of factors of production or inputs
17. marginal product
the additional output that will be forthcomming from an additional worker other inputs constant
18. average product
output per worker
19. production function
the relationship between the inputs (factors of production) and outputs
20. law of diminishing marginal productivity
states that as more and more of a variable input is added to an existing fixed input, eventually the additional output one gets from that additional input is going to fall
21. accounting profit is...
economists
• explicit revenue less explicit cost.
• include implicit revenue and cost in their determination of profit
22. implicit revenue includes...
the increases in the value of assets owned by the firm.
23. implicit costs include..
opportunity cost of time and capital provided by the owners of the firm
24. in the long run...
in the short run
• a firm can choose among all possible production techniques;
• the firm is constrained in its choices
25. the law of diminishing marginal productivity states..
that as more and more of a variable input is added to a fixed input the additional output the firm gets will eventually be decreasing.
26. costs are generally...
divided into fixed costs, variable costs and total costs
27. TC= FC + VC; MC =
chaang in TC
28. the average variable costs curve and marginal cost curve are...
mirror images of the average product curve and the marginal product curve respectively
29. the law of diminishing marginal productivity causes
marginal and average cost to rise
30. if MC > ATC, then ATC is rising
if MC= ATC then ATC is.....
if MC < ATC, then ATC is...
constant, falling
31. the marginal cost curve goes through
the minimum points of the average variable cost curve and average total cost curve
 Author: ndumas2 ID: 71371 Card Set: Econ chapter 12 Updated: 2011-03-07 22:06:10 Tags: COLANDER chapter Folders: Description: terms and summary Show Answers: