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Inputs
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the resources—such as labor, money, materials, and energy—that are converted into outputs
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Outputs
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Things produced by something
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fixed costs
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costs that remain constant as output changes
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variable costs
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costs that vary with the quantity of output produced
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Short Run Costs
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fixed costs and variable costs
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Long Run Costs
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all costs are variable, no fixed costs
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Specialization
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Having more workers will result in more produced products
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The law of diminishing marginal returns
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As more of a variable resource is added to a given amount of a fixed resource, marginal product eventually declines and could become negative
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marginal product
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extra output due to the addition of one more unit of input
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marginal cost
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the cost of producing one more unit of a good
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revenue
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income
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marginal revenue
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the additional income from selling one more unit of a good; sometimes equal to price
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Profit and loss
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Profit/ Loss = Total Revenue - Total Cost
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economies of scale
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factors that cause a producer's average cost per unit to fall as output rises
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diseconomies of scale
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increases in cost per unit when output increases
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Internal economies of scale
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Changes within business result in lower production costs
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External economies of scale
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Changes in industry that causes to move into economies of scale
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