Term
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Definition
| the total satisfaction a consumer derives from consumption' it could refer to either the total utility of consuming a particular good or the total utility from all consumptions. |
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Term
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Definition
| the change in total utility derived from a one unit change in consumption of a good. |
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Term
| law of diminishing marginal utility |
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Definition
| more of a good a person consumes/ period, the smaller the incresase in total utility from consuming one more unit. |
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Term
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Definition
| the condition in which an individual consumers budget or spent and the last dollar spent on each good yields the same marginal utility therefore utility is maximized [ water, water, everywhere} |
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Term
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Definition
| the dollar value of the marginal utility derived from consuming each additional unit of a good. |
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Term
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Definition
the difference between the maximum amount that a consumer is willing to pay for a given quantity of a good and what the consumer actually pays.
[marginal value of free medical care] |
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Term
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Definition
| shows all combinations of goods that provide this consumer with the same satisfaction or the same utility (the consumer finds all combination on a curve equally preferred) |
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Term
| Marginal rate of substitution |
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Definition
| the number of "A" you are wiling to give up to get more of "B", neither gaining nor losing utility in the process. |
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Term
| Law of diminishing rate of substitution |
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Definition
| ...states that as your consumption of "A" increases, the amount of "B" you are willing to give up to get another "A" declines. |
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Term
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Definition
| a graphical representation of a consumer's taste, each curve reflects a different level of utility. |
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Term
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Definition
| opportunity cost of resources employed by a firm that takes, the form of cash payments. |
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Term
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Definition
| a firms total revenue minus it's explicit cost. |
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Term
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Definition
| a firms opportunity cost of using it's own resources or those provided by its owners without a corresponding cash payment. |
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Term
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Definition
| a firms total revenue minus its explicit and implicit costs. |
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Term
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Definition
| the accounting profit earned when all resources earn their opportunity cost. |
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Term
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Definition
any resource that can be varied in the short one to increase or decrease production.
-Labor most easy to vary! |
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Term
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Definition
| any resources that cannot be varied in the short run. |
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Term
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Definition
| a period during which at least one of a firms resources is fixed |
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Term
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Definition
| a period during which all resources under the firms control are variable |
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Term
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Definition
| the total output produced by a firm |
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Term
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Definition
| the relationship between the amount of resources employed and a firms total product. |
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Term
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Definition
| the change in total product that occurs when the use of a particular resource increases by one unit, all other resources constant. |
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Term
| increasing marginal returns |
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Definition
| the marginal product of a variable resources increases as each additional unit of that resource is employed |
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Term
| increasing marginal returns |
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Definition
| the marginal product of a variable resources increases as each additional unit of that resource is employed. |
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Term
| law of diminishing marginal returns |
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Definition
| as more of a variable resource is added to a given amount if a fixed resource marginal product eventually declines and could become negative. |
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Term
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Definition
| any production cost that is independent of the firms rate of output. |
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Term
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Definition
| any production cost that changes as the rate of output changes |
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Term
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Definition
| the sum of fixed cost and variable cost, or TC=FC+VC |
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Term
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Definition
| variable cost divided by output, or AVC= VC/q |
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Term
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Definition
| total cost divided by output or ATC= TC/q; the sum of average fixed cost and AVC or atc=afc+avc |
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Term
| Long run average cost curve |
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Definition
| A curve that indicates the lowest average cost of production at each rate of output when the size, or seal, of the firm varies, also called the planning curve. |
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Term
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Definition
| forces that reduce a firm's average cost as the seal of operation in the long run. |
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Term
| constant long run average cost |
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Definition
| a cost that occurs when, over some range of output, long run average cost neither increases nor decreases with changes in firm size. |
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Term
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Definition
| identifies the maximum quantities of a particular good or servise that can be produced per time period with various combinations of resources for a given level of technology. [The PF can be represented by an equation, a graph or a table. ] |
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Term
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Definition
| a curve that shows all the technologically efficient combination of 2 resouces, such as labor and capital that produce a certain rate of output. |
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Term
| Marginal rate of technical substitution |
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Definition
| the rate at which later substitutes for capital without affecting output. |
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Term
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Definition
| identifies all combinations of capital and labor the firm can hire for a given total cost. |
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Term
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Definition
| the line formed by connecting tangency points. |
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Term
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Definition
an industry that can expand a contract without affecting the long run per unit cost of production; the long run industry supply curve horizontal
ie. pencil industry |
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Term
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Definition
| an industry that faces higher per unit production costs as industry output expands on the long run the long run industry supply curve slopes upwards |
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Term
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Definition
| the condition that exists when market output is produced using the least cost combination of inputs; minimum average cost in the long run. |
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Term
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Definition
| the condition that exists when firms produce the output most preferred by consumers; marginal benefit equals marginal costs. |
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Term
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Definition
| a bonus for producers in the short run; the amount by which total revenue from production exceeds variable costs. |
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