Chapter 8 Econ

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Posted on

May 24th, 2023

question

total revenue

answer

The amount a firm receives from the sale of goods and services

question

Total cost

answer

The amount a firm spends to produce and or sell goods and services

question

Profit

answer

The result when total revenue is higher than total cost

question

Loss

answer

The result when total revenue is less than total cost

question

explicit costs

answer

tangible out-of-pocket expenses

question

implicit costs

answer

the costs of resources already owned, for which no out-of-pocket payment is made

question

accounting profit

answer

profit calculated by subtracting a firm's explicit costs from total revenue

question

Economic profit

answer

Profit calculated by subtracting both the explicit costs and the implicit costs from a firms total revenue

question

Output

answer

the product the firm creates

question

factors of production

answer

The inputs (labor, land, and capital) used in producing goods and services

question

production function

answer

the relationship between the inputs a firm uses and the outputs it creates

question

Marginal product

answer

the change in output associated with one additional unit of an input

question

diminishing marginal product

answer

condition occurring when successive increases in inputs are associated with a slower rise in output

question

Variable costs

answer

Costs that change with the rate of output

question

Fixed costs

answer

Costs that do not vary with a firms output in the short run also known as overhead

question

Average Variable Cost (AVC)

answer

The amount determined by dividing a firms total variable costs by the output

question

Average Fixed Cost (AFC)

answer

The amount determined by dividing a firms total fixed costs by the output

question

Average Total Cost (ATC)

answer

the sum of average variable cost and average fixed cost

question

Marginal Cost (MC)

answer

The increase in cost that occurs from producing one additional unit of output

question

Scale

answer

the size of the production process

question

efficient scale

answer

the output level that minimizes the average total cost in the long run

question

economies of scale

answer

Condition occurring when long run average total costs decline as output expands

question

diseconomies of scale

answer

Condition occurring when long run average total costs rise as output expands

question

constant returns to scale

answer

a condition in which the long-run average total cost remain constant as output expands

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question

total revenue

answer

The amount a firm receives from the sale of goods and services

question

Total cost

answer

The amount a firm spends to produce and or sell goods and services

question

Profit

answer

The result when total revenue is higher than total cost

question

Loss

answer

The result when total revenue is less than total cost

question

explicit costs

answer

tangible out-of-pocket expenses

question

implicit costs

answer

the costs of resources already owned, for which no out-of-pocket payment is made

question

accounting profit

answer

profit calculated by subtracting a firm's explicit costs from total revenue

question

Economic profit

answer

Profit calculated by subtracting both the explicit costs and the implicit costs from a firms total revenue

question

Output

answer

the product the firm creates

question

factors of production

answer

The inputs (labor, land, and capital) used in producing goods and services

question

production function

answer

the relationship between the inputs a firm uses and the outputs it creates

question

Marginal product

answer

the change in output associated with one additional unit of an input

question

diminishing marginal product

answer

condition occurring when successive increases in inputs are associated with a slower rise in output

question

Variable costs

answer

Costs that change with the rate of output

question

Fixed costs

answer

Costs that do not vary with a firms output in the short run also known as overhead

question

Average Variable Cost (AVC)

answer

The amount determined by dividing a firms total variable costs by the output

question

Average Fixed Cost (AFC)

answer

The amount determined by dividing a firms total fixed costs by the output

question

Average Total Cost (ATC)

answer

the sum of average variable cost and average fixed cost

question

Marginal Cost (MC)

answer

The increase in cost that occurs from producing one additional unit of output

question

Scale

answer

the size of the production process

question

efficient scale

answer

the output level that minimizes the average total cost in the long run

question

economies of scale

answer

Condition occurring when long run average total costs decline as output expands

question

diseconomies of scale

answer

Condition occurring when long run average total costs rise as output expands

question

constant returns to scale

answer

a condition in which the long-run average total cost remain constant as output expands

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