Econ chapter 12
Card Set Information
Econ chapter 12
terms and summary
The additional cost resulting from a one unit increase in output.
: MC= ^TC
the sum of all costs of inputs used by a firm in production
: TC = FC + VC
Average total cost
total cost per unit of production
: ATC= AFC + AVC
cost that is already spent and cannot be recovered. It exists only in the short run
Average fixed cost
fixed costs per unit of production
: AFC = FC/Q
Costs that vary with production
average variable cost
variable costs per unit of production
: AVC= VC/Q
the name givent to that transformation of factors into goods and services
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
total revenue - total cost
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
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.
(explicit and implicit revenue) - (explicit and implicit cost)
long run decision
a firm chooses among all possible production techniques
the firm is constrained in regard to what production decisions it can make, it has fewer options in this decision comapired to long run
a table showing the output resulting from various combinations of factors of production or inputs
the additional output that will be forthcomming from an additional worker other inputs constant
output per worker
the relationship between the inputs (factors of production) and outputs
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
accounting profit is...
explicit revenue less explicit cost.
include implicit revenue and cost in their determination of profit
implicit revenue includes...
the increases in the value of assets owned by the firm.
implicit costs include..
opportunity cost of time and capital provided by the owners of the firm
in the long run...
in the short run
a firm can choose among all possible production techniques;
the firm is constrained in its choices
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.
costs are generally...
divided into fixed costs, variable costs and total costs
TC= FC + VC; MC =
chaang in TC
the average variable costs curve and marginal cost curve are...
mirror images of the average product curve and the marginal product curve respectively
the law of diminishing marginal productivity causes
marginal and average cost to rise
if MC > ATC, then ATC is rising
if MC= ATC then ATC is.....
if MC < ATC, then ATC is...
the marginal cost curve goes through
the minimum points of the average variable cost curve and average total cost curve