question
Formula for profit
answer
total revenue - total cost
question
Formula for total revenue
answer
Price x Quantity
question
formula for total cost
answer
fixed cost + variable cost
question
total fixed cost
answer
The total costs of inputs that are fixed, cannot be changed in the short run
question
Total Variable Cost (TVC)
answer
The total costs of inputs that are variable, can be changed in the short run
question
Average fixed costs
answer
The average fixed cost per unit of output. (AFC=TFC/Y)
question
Average Variable Cost
answer
The average variable cost per unit of output. (AVC=TVC/Y)
question
Average Total Costs
answer
The average total cost per unit of output. (ATC=AVC+AFC)
question
Formula for Marginal cost
answer
The change in Total cost divided by the change in output
question
What types of returns do our typical production function exhibit
answer
Increasing, decreasing, and negative
question
Marginal Physical Product
answer
The amount of additional or marginal TPP obtained from using an additional unit of variable input. Ceterus Peribus. MPP=Change of Y divided by change in X
question
What is typically the slope of the function
answer
MPP
question
What is economics
answer
The study of human behavior and how choices, motives, and incentives impact how scarce resources are allocated across completing ends
question
Ceteris Peribus
answer
Holding all else constant
question
positive economics
answer
Factual statements that contain no value judgements
question
normative economics
answer
Statements of opinion and/or value. Describe what should be.
question
Producer
answer
An individual or firm that produces
question
Consumer
answer
An individual or firm that purchases a good or service
question
What is a good?
answer
A physical product
question
What is a service?
answer
An intangible product (Haircut)
question
What is an economic good?
answer
A good that is scarce
question
What does A stand for?
answer
Land
question
What does the L stand for?
answer
Labor
question
What does the K stand for?
answer
Capital
question
What does the M stand for?
answer
Management
question
Fixed input
answer
An input whose quantity does not vary with the level of output
question
Variable input
answer
An input whose quantity does vary with the level of output
question
The production function
answer
the physical relationship between inputs and outputs
question
Average Physical Product
answer
The average productivity of each unit of variable input used. (APP=Y/X)
question
Law of Diminishing Marginal Returns
answer
As additional units of one input are combined with a fixed amount of other inputs, a point is always related at which the additional output produced from the last unit of added input will decline
question
Short run
answer
Not enough time to change very decision
question
Long run
answer
Long enough to change any decision
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