Term
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Definition
| the amount a firm receives for the sale of its output |
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Definition
| the market value of the inputs a firm uses in production |
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Definition
| total revenue minus total costs |
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| input costs that require an outlay of money by the firm |
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Definition
| input costs that do not require an outlay of money by the firm |
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Definition
| total revenue minus total cost, including both explicit and implicit costs |
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Definition
| total revenue minus total explicit cost |
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Definition
| the relationship between quantity of inputs used to make a good and the quantity of output of that good |
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Definition
| the relationship betweent eh quantity of inputs used and the quantity of outputs used to make a good |
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Term
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Definition
| the increase in output that arises from an additional unit of input |
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Term
| diminishing marginal product |
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Definition
| the property whereby the marginal product of an input declines as teh quatity of the input increases |
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Term
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Definition
- the relationship between quantity produced and total costs
- gets steeper as the quantity of output increases because of diminishing marginal product |
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Definition
| costs that do not vary with the quantity of output produced |
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Definition
| costs that do vary with the quantity of output produced |
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Term
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Definition
- total cost divided by the quantity of output
- the sum of average fixed cost and average variable cost |
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Term
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Definition
| fixed costs divided by the quantity of output |
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Term
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Definition
| variable cost divided by the quantity of output |
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Term
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Definition
- the increase in total cost that arises from an extra unit of production
- MC = Change in total cost / change in quantity |
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Term
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Definition
- marginal costs rises with the quantity of output produced (hence property of diminishing marginal product)
- when quantity of a product produced is high, the marginal product of an extra unit of labor is low,a nd marginal cost of an extra unit of output is large |
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Term
| U-shaped average total cost |
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Definition
| the bottom of the U-shape occurs at the quantity that minimizes average total cost |
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Term
| The Relationship between Marginal Cost and Average Total Cost |
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Definition
- whenever marginal cost is less than average total cost, ATC is falling. whenever MC is greater than ATC, ATC is rising.
- the MC curve crosses the ATC curve at its minimum |
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Term
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Definition
| the property whereby long-run average total cost falls as the quantity of output increases |
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Term
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Definition
| the property wehreby long run average total cost rises as the quantity of output increases |
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Term
| constant returns to scale |
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Definition
| the property whereby long run average total cost stays teh same as the quantity of output changes |
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