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Profit
answer
Total revenue minus total cost
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Profit (simplified)
answer
= Price x quantity produced - average cost x quantity produced
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total revenue
answer
price x quantity
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Total Costs
answer
Total Fixed Costs + Total Variable Costs
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Average Fixed Cost (AFC)
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= TFC/Q
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Average Variable Cost (AVC)
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= TVC/Q
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Average Total Cost (ATC)
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= TC/Q = AFC + AVC
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Marginal Cost (MC)
answer
= ^TC/^q
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accounting costs
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Out-of-pocket costs as an accountant defines them. Sometimes referred to as explicit costs.
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economic costs
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Costs that include the full opportunity costs of all inputs. These include implicit costs.
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Total Fixed Costs (TFC)
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Costs that do not vary with changes in short-run output. They must be paid even when output is zero.
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Total Variable Cost (TVC)
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The total of all costs that vary with output in the short run.
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Total Cost (TC)
answer
The total economic costs of all inputs used by a firm in production.
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Averaged Fixed Costs (AFC)
answer
Fixed costs per unit of output.
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Average Variable Cost (AVC)
answer
Variable costs per unit of output.
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Average Total Cost (ATC)
answer
Total costs per unit of output.
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Marginal Costs (MC)
answer
The increase in total cost from producing one added unit of output. ^q usually equals one.
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Variable Costs
answer
A cost that depends on the level of production chosen.
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