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Average Total Cost (ATC)
answer
total costs divided by quantity of output
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Average Fixed Cost (AFC)
answer
fixed cost divided by the quantity of output
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average variable cost
answer
variable cost divided by the quantity of output produced
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marginal cost
answer
the cost of producing one more unit of a good
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marginal productivity of labor
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the increase in output that arises from an additional unit of input
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elasticity of demand
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a measure of how consumers react to a change in price
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Elasticity of Income
answer
how demand changes in response to income
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optimal consumption bundle
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the consumption bundle that maximizes the consumer's total utility given their budget constraint
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marginal utility per dollar
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=MU/P the additional utility from spending one more dollar on that good or service
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marginal utility
answer
The change in usefulness obtained from acquiring one more unit of a product
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Cross Price Elasticity
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the percentage change in the quantity demand for product X that occurs in response to a percentage change in price of product Y
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total revenue
answer
Price x Quantity
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profit
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total revenue minus total cost
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profit maximizing principle of marginal analysis
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when faced with a profit-maximizing "how much" decision, the optimal quantity is the largest quantity at which the marginal benefit is greater than or equal to marginal cost
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Marginal Revenue (MR)
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the change in total revenue from selling one more unit of a product
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shutdown price
answer
In a perfectly competitive market, a business will shut down when the market price is below the minimum variable costs(P<MVC)
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