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input costs that require a monetary payment- opportunity costs to the firm |
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the opportunity costs of production that dont require monetary payment. |
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the difference between total revenues and total costs |
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total revenues minus total explicit costs |
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total revenues minus explicit and implicit costs |
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Definition
costs that have been incurred and cannot be recovered |
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a period too brief for some production inputs to be varied |
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Definition
a period which all production inputs are variable |
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the relationship between the quantity of inputs and the quantity of outputs |
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Definition
the total output of a good produced by a firm |
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the change in total output of a good that results from a one unit change in output |
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Term
Diminishing marginal product |
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Definition
as a variable input increases, with other inputs fixed, a point will be reached where the additions to output will eventually decline |
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Definition
costs that do not vary with the level of output |
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Definition
the sum of the firm's fixed costs |
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Definition
costs that vary with the level of output |
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total variable cost (TVC) |
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the sum of the firm's total variable costs |
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Definition
the sum of the firm's total fixed costs and total variable costs |
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Definition
a per-unit cost of operation; total cost divided by output |
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Term
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Definition
a per unit measure of fixed costs; fixed costs divided by output |
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Term
Average Variable Cost (AVC) |
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Definition
a per-unit measurement of variable costs; variable costs divided by output |
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Definition
the change in total costs resulting from a one-unit change in output |
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Term
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Definition
occur in an output range where LRATC falls as output increases |
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Term
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Definition
the output level where economies of scale are exhausted and constant returns to scale begin |
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Term
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Definition
occur in an output range where LRATC rises as output expands |
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Term
Constant Returns to scale |
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Definition
occur in an output range where LRATC does not change as output varies |
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Term
Perfectly Competitive Market: Characteristics |
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Definition
1)Many buyers and sellers 2)Identical (homogeneous) products 3)Easy market entry and exit |
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Term
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Definition
a perfectly competitive firm that that takes the price it is given by the intersection of the market demand and supply curves |
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Term
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Definition
the product price times the quantity sold TR = P x Q |
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Term
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Definition
total revenue divided by the number of units sold |
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Definition
the increase in total revenue resulting from a one-unit increase in sales |
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Profit-maximizing level of output |
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Definition
a firm should always produce at the output where MR = MC |
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Term
Determining Short Term Profits and Losses Perfectly competitive market |
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Definition
1) Find where marginal revenue equals marginal cost, go down to find q* 2) At q* go up to demand curve and then left to find p* then find TR = P x Q 3)Find total cost by going up from q* to the ATC curve and then left to find average cost per unit. TC = ATC x Q |
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Definition
the portion of the MC curve above the AVC curve |
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Term
Short-run market supply curve |
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Definition
the horizontal summation of the individual supply curves in the market |
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Term
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Definition
an industry where input prices (and cost curves) do not change as industry output changes |
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Definition
an industry where input prices rise (and cost curves rise) as industry output rises |
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where a good or service is produced the at the lowest possible cost |
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Definition
where P = MC and production will be allocated to reflect consumer preferences |
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Definition
the single supplier of a product that has no close substitute |
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Definition
a firm that can produce at a lower cost than a number of smaller firms can |
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Term
Determining short term profits and losses: monopoly |
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Definition
1) Find where MR = MC and go straight down to find Q monopoly 2) At Q monopoly go straight up to demand curve and go left to find P monopoly. then calculate TR = P x Q 3) Find total cost. go straight up from Q monopoly to the ATC curve and go left to find average total cost at Q monopoly. TC = ATC x Q |
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Term
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Definition
setting price equal to average total cost |
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Term
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the practice of charging different consumers different prices for the same good or service |
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Definition
the maximum amount a customer would be willing to pay for a unit of output |
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Definition
when producers charge different prices during different periods because the demand and the cost of producing a product vary over time |
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Term
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Definition
monopoly gains more revenue because it sells more when adjusting price |
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Term
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Definition
gains less revenue because it gets less from each unit sold because of the lower price, monopoly |
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