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Definition
| The satisfaction experienced from comsuming a good. |
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Definition
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Definition
| The change in total utility from one additonal unit of a good. |
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Term
| Law of Diminishing Marginal Utility |
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Definition
| As the consumption of a particular good increases, marginal utility decreases. |
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Term
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Definition
Pick the combination of two activities where the marginal benefit per dollar for the first activity equals the marginal benefit per dollar for the second activity.
Marginal Utility = Marginal Utility of Books
Price per movie = Price per Book |
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Term
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Definition
| The change in quantity consumed that is caused by a change in the relative price of the good, with real income held constant. |
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Term
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Definition
| The change in quantity consumed that is caused by a change in real income, with relative price held constant. |
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Term
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Definition
| The line connecting all the combinations of two goods that exhaust a consumer's budget line. |
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Term
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Definition
Total revenue minus econmic cost.
economic profit = total revenue - economic cost |
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Term
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Definition
| The oppurtunity cost of the inputs used in the production process; equal to explicit cost plus implicit cost. |
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Definition
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Term
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Definition
| An oppurtunity cost that does not involve a monetary payement |
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Term
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Definition
The explicit cost of production
accounting cost = explicit cost |
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Term
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Definition
Total revenue minus accounting cost.
accounting profit = total revenue - accounting cost |
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Term
| Marginal Product of Labor |
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Definition
| The change in output from one additional unit of labor |
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Term
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Definition
| As one input increases while the other inputs are held fixed, output increases at a decreasing rate. |
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Term
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Definition
| A curve showing the relationship between the quantity of labor and the quantity of output produced, ceteris paribus. |
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Definition
| Cost that does not vary with the quantity produced. |
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Term
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Definition
| Cost that varies with the quantity produced |
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Term
| Short-Run Total Cost (TC) |
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Definition
The total cost of production when at least one input is fixed; equal to fixed cost plus variable cost.
TC = FC + VC
Short-Run Total Cost = Fixed Cost + Variable Cost |
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Term
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Definition
Fixed cost divided by the quanity produced
AFC = FC/Q
Average Fixed Cost = Fixed Cost / Quantity Produced |
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Term
| Average Variable Cost (AVC) |
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Definition
Variable cost divided by the quantity produced.
AVC = VC / Q
Average Variable Cost = Variable Cost / Quantity Produced |
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Term
| Short-Run Average Total Cost (ATC) |
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Definition
Short-run total cost divided by the quantity produced; equal to AFC plus AVC.
ATC = TC/Q = FC/Q + VC/Q = AFC +AVC
Average Total Cost = Total Cost / Quantity Produced = Fixed Cost / Quantity Produced + Variable Cost / Quantity Produced = Average Fixed Cost + Average Variable Cost |
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Term
| Short-Run Marginal Cost (MC) |
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Definition
The change in short-run total cost resulting from a one-unit increase in output.
MC = Change in Total Cost / Change in Output
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Term
| Long-Run Total Cost (LTC) |
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Definition
| The total cost of production when a firm is perfectly flexible in choosing it's inputs |
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Term
| Long-Run Average Cost (LAC) |
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Definition
| The long-run cost divided by the quantity produced. |
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Term
| Constant Returns to Scale |
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Definition
| A situation in which the long-run total cost increases proportionately with output, so average cost is constant. |
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Term
| Long-Run Marginal Cost (LMC) |
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Definition
| The change in the long-run cost resulting from a one-unit increase in output |
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Term
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Definition
| An input that cannot be scaled down to produce a smaller quantity of output. |
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Term
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Definition
| A situation in which the long-run average cost of production decreases as output increases. |
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Term
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Definition
| The output at which scale economies are exhausted |
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Term
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Definition
| A situation in which the long-run average cost of production increases as output increases. |
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Term
| Perfectly Competitive Market |
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Definition
| A market with many sellers and buyers of a homogeneous product and no barriers to entry. |
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Term
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Definition
| A buyer or seller that takes the market price as given. |
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Term
| Firm-Specific Demand Curve |
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Definition
| A curve showing the relationship between the price changed by a specific firm and the quantity the firm can sell. |
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Term
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Definition
| The change in total revenue from selling one more unit of output. |
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