Chapter 13 vocabulary

Chapter 13 vocabulary - o accounting profit Total revenue...

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o accounting profit Total revenue minus total explicit cost. o average fixed cost Fixed cost divided by the quantity of output. o average total cost Total cost divided by the quantity of output. o average variable cost Variable cost divided by the quantity of output. o constant returns to scale The property whereby long-run average total cost stays the same as the quantity of output changes. o diminishing marginal product The property whereby the marginal product of an input declines as the quantity of the input increases. o diseconomies of scale The property whereby long-run average total cost rises as the quantity of output increases. o economic profit Total revenue minus total cost, including both explicit and implicit costs. o economies of scale The property whereby long-run average total cost falls as the quantity of output increases. o efficient scale The quantity of output that minimizes average total cost. o explicit costs Input costs that require an outlay of money by the firm. o fixed costs Costs that do not vary with the quantity of output produced. o implicit costs Input costs that do not require an outlay of money by the firm. o marginal cost The increase in total cost that arises from an extra unit of production. o marginal product The increase in output that arises from an additional unit of input. o production function The relationship between the quantity of inputs used to make a good and the quantity of output of that good. o profit 1
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Total revenue minus total cost. o total cost The market value of the inputs a firm uses in production. o total revenue (for firm) The amount a firm receives for the sale of its output. o variable costs Costs that vary with the quantity of output produced. Chapter Recap: Summary o The goal of firms is to maximize profit, which equals total revenue minus total cost. o When analyzing a firm's behavior, it is important to include all the opportunity costs of production. Some of the opportunity costs, such as the wages a firm pays its workers, are explicit. Other opportunity costs, such as the wages the firm owner gives up by working in the firm rather than taking another job, are implicit. o A firm's costs reflect its production process. A typical firm's production function gets flatter as the quantity of an input increases, displaying the property of diminishing marginal product. As a result, a firm's total-cost curve gets steeper as the quantity produced rises. o
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Chapter 13 vocabulary - o accounting profit Total revenue...

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