question
...
answer
A decrease in long-run total average cost as output increases.
question
Economic efficiency
answer
Producing a given amount of output at the least possible cost
question
Technical efficiency
answer
Producing a given amount of output without using any redundant inputs
question
Marginal product
answer
The additional output created by adding more of an input while holding other inputs constant
question
Law of diminishing marginal productivity
answer
The additional output produced by adding more of an input while holding other inputs constant decreases as more of the input is utilized
question
Principle of rational choice
answer
It is beneficial to consume more of those things with more marginal utility per dollar and less of those with less marginal utility per dollar
question
Economic profit
answer
Total revenue- explicit and implicit cost
(TR- explicit and implicit cost)
(TR- explicit and implicit cost)
question
Indifference curve
answer
A graphical depiction of the combinations of goods that all yield the same level of utility
question
Marginal utility
answer
The additional utility a person receives from consuming one more unit of a good or service
question
Average product
answer
Output per worker
question
Production
answer
transformation of factors into goods and services
question
Firm
answer
economic institution that transforms factors of production into goods and services
question
Profit
answer
Total revenue - total cost
(TR-TC)
(TR-TC)
question
Total Cost
answer
explicit payments to the factors of production plus the opportunity cost of the factors provided by the owners of the firm
question
Total Revenue
answer
Amount a firm receives for selling it product or service plus any increase in the value of the assets owned by the firm
question
Long-Run decision
answer
a firm chooses among all the possible production techniques
question
Short-Run Decision
answer
firm is constrained in regard to what production decisions it can make
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Production Table
answer
table showing the output resulting from various combinations of factors of production
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Consumer Choice
answer
Self-interest and rationality; maximize utility
question
Budget Constraint
answer
Representation of limits you face given market price
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Marginal Utility
answer
change in utility/ change in quantity
question
Accounting Profit
answer
Total Revenue - Total cost
(TR-TC)
(TR-TC)
question
Marginal Product (MP)
answer
Change in output/ change in input (holding other input constant)
question
Fixed COst
answer
Does not change as output changes
question
Variable Cost
answer
Depend on level of outut
question
Cost of Labor (W)
answer
Price of output x marginal product of labor
(P* x MPl)
(P* x MPl)
question
Consumer Rules
answer
Goal is to maximize utility
Marginal UtilityX/ Price of X = Marginal UtilityY/ Price of Y
(MUx/Px = MUy/Py)
Marginal UtilityX/ Price of X = Marginal UtilityY/ Price of Y
(MUx/Px = MUy/Py)
question
Producer Rules
answer
Goal is to maximize profit
P x MPl = W (short run)
MPl/W = MPk/R (long run)
Marginal Revenue = Marginal Cost
(MR=MC)
P x MPl = W (short run)
MPl/W = MPk/R (long run)
Marginal Revenue = Marginal Cost
(MR=MC)
question
Zero economic profit when
answer
P= min. average total cost= Marginal Cost
P=min ATC= MC
P=min ATC= MC
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