question
Explicit Costs
answer
Input costs requiring an outlay of money by the firm (ex. wages of workers)
question
Implicit Costs
answer
Input costs not requiring an outlay of money by the firm (ex. opportunity cost of owner's time)
question
Total Cost=
answer
Explicit Cost + Implicit Cost
question
Accounting Profit=
answer
Total Revenue - Total Explicit Cost
question
Economic Profit=
answer
Total Revenue - Total Cost (Exp.+Imp. Cost)
question
Which is higher, accounting profit or economic profit?
answer
Accounting Profit ignores implicit costs, therefor it is higher than economic profit
question
Production Function
answer
Relationship between quantity of inputs used to make a good and the quantity of output for that good
question
Production Function gets ______ as production rises?
answer
flatter
question
Marginal Product
answer
increase in output from an additional unit of input (all else equal)
question
Marginal Product of Labor (MPL) =
answer
Change in quantity over change in labor
question
Marginal Product of an input _______ as the quantity of that input _______.
answer
declines, inceases
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