Micro Exam 3

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Marginal Cost

Change in total cost / change in output

________ is an important factor in determining the true cost of an economic activity such as the production of goods and services

Implicit costs

Explicit costs

Monetary payments made by individuals, firms, and governments for the use of others land, labor, capital and entrepreneurial ability

Economic Profit

Total revenue minus economic costs, which include both implicit and explicit costs of production

Accounting profit

Total revenue minus the explicit costs of production.

increasing marginal returns

a characteristic of production whereby the marginal product of the next unit of a variable resource utilized is greater than that of the previous variable resource

diminishing marginal resource

a characteristic of production whereby the marginal product of the next unit of a variable resource utilized is less than that of the previous variable resource

average total cost

above average fixed and average variable costs

Marginal product is the

additional output produced as a result of utilizing one or more unit of a variable resource

Marginal Product

additional output produced as a result of utilizing one or more variable of a unit resource

The fixed cost per unit is equal to

average fixed cost

Marginal product always intersects the _________ at the maximum of the __________

average product, average product

Economic costs

costs associated with the use of resources; sum of explicit and implicit

Implicit costs

costs for which no monetary payment is explicitly made

Variable Costs

costs that change with the amount of output produced

average fixed cost

declines throughout the range of input

Economic costs can be defined as the sum of ______ and ______ costs

implicit and explicit

?

intersects the minimum of the average variable and average total costs

A profit maximizing firm should produce a level of output where

marginal revenue equals marginal cost

_________ cost is associated with any cost, implicit or explicit

opportunity

Implicit costs

opportunity costs of using owned resources

Total Revenue equals

price times quantity

Total revenue equals

price times quantity

Marginal Product

the additional output as a result go utilizing 1 more unit of a variable resource

Average product

the average amount produced per unit of a resource employed; total product divided by the number of units of a resource employed

Increasing marginal returns is a characteristic of production whereby

the marginal product of the next unit of a variable resource utilized is greater than that of the previous variable resource

Short run

the period of time in which at least one input is fixed

Total Product

the total amount of output produced with a given amount of resources

Accoutning profit

total revenue minus the explcit costs of production

Economic Profit Equation

total revenue minus the total implict and explicit costs

A company can break even and meet operating costs without a loss when it earns _______ economic profit

zero


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