13 The Cost of Production

Principles of Economics, 4th Edition (Student Edition)

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
13. THE COSTS OF PRODUCTION accounting profit total revenue minus total explicit cost average fixed cost fixed costs divided by the quantity of output average total cost total cost divided by the quantity of output average variable cost variable costs divided by the quantity of output constant returns to scale the property whereby long-run average total cost stays the same as the quantity of output changes diminishing marginal product the property whereby the marginal product of an input declines as the quantity of the input increases diseconomies of scale the property whereby long-run average total cost rises as the quantity of output increases economic profit total revenue minus total cost, including both explicit and implicit costs economies of scale the property whereby long-run average total cost falls as the quantity of output increases efficient scale the quantity of output that minimizes average total cost explicit costs input costs that require an outlay of money by the firm fixed costs costs that do not vary with the quantity of output produced
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 2

13 The Cost of Production - 13. THE COSTS OF PRODUCTION...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online