MIDTERM 2 INDEX CARD - Smokin'Notes ECO2023 Index Card...

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Smokin’Notes ECO2023 Index Card Template www.SmokinNotes.com FORMULAS: TC = FC +VC . ATC = TC / Q . AFC = FC/Q. AVC = VC/Q. ATC = AFC + AVC . TC = ATC*Q . MC = ∆TC/∆Q . MR = ∆TR/∆Q . MP labor = ∆Q/∆C. PED = % change in quantity demanded/% change in price. Dividend Yield = dividend/ price. Max Utility is when MU/P = MU/P. ECO PROFIT = TR-TC. PE RATIO: Price/Earnings. PROPRIETORSHIP: one owner, simple to start, profits taxed once, unlimited liability. PARTNERSHIP: 2 or more owners, simple to start but a bit more complicated than proprietorship, profits taxed once, unlimited liability. CORPORATION : many owners called shareholders, who own stock, capital is easy to obtain, difficult and costly to form, profits taxed twice, limited liability. BONDS: debt, must pay interest, finite life. Loans made to company and have no ownership of company. STOCKS: ownership, might pay dividends, infinite life. You can gain through dividends or capital gains. SHORT RUN: period of time during which at least one of the firm’s inputs cannot be changed. LONG RUN: period of time during which all inputs can be varied. A variable input can be changed and a fixed input cannot be changed. IN SR labor is variable, capital is fixed. In LR labor is variable and capital is variable. FIXED COSTS : do not change. Include rent, facilities, large machinery. VARIABLE COSTS: changes. As output increases, variable costs increase. TOTAL COST: as output increases, total costs increase because variable costs increase. AFC: as output increases, AFC decreases. AVC: as output increases, AVC decreases at first, reaches its minimum, then rises. ATC: as output increases, ATC initially decreases, but eventually begins to rise again. If MC <ATC, ATC will fall. If MC > ATC, ATC will rise. If MC<AVC, AVC will fall. If MC>AVC, AVC will rise. Vertical distance between
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