Micro Exam 3
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
