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...
    • 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

Card Set Information

Econ chapter 12
2011-03-07 22:06:10
COLANDER chapter

terms and summary
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