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| (opportunity costs) Internal costs that the entrpreneur gives upt o start a business. |
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| money used to buy land, labor, capitol |
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| total revenue - explicit costs |
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total revenue - (explicit + implicit costs) this is what draws entrepreneurs to an industry |
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zero economic profit total revenue covers all explicit costs, implicit costs |
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Definition
| quantity of inputs it takes to prduce a certain amount of output. |
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| production period where at least one input is fixed (usually factory size) |
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Definition
| production period where all inputs are variable |
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| additional product produced when I add one more unit of input (usually labor) |
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Term
| diminishing marginal product |
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Definition
As you hire more units of a variable input (usually labor) the marginal productivity goes up, but after a while goes down (i.e. you make dinner by yourself, then a few cousins come over and help it is better. If the whole family arrives there are too many, production goes down) |
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Definition
| costs that do not change witht he level of production |
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Definition
costs that chane with the level of production. i.e. electricity bill, chocolate chips (in a cookie factory) |
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fixed costs + variable costs ATC = total cost/quantity produced |
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Definition
| additional cost of producing one more unit |
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| additional revenue of selling one more unit |
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Term
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Definition
| marginal cost = marginal revenue |
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