Unit 3 Econ Vocab

money payments to non-owners of the firm for the resources they supply

the opportunity cost of using self-owned resources

net income earned after subtracting all dollar costs from total revenue.

the difference between the revenue received from the sale of an output and the costs of all inputs used, as well as any opportunity costs

a profit metric that takes into consideration both explicit and implicit costs.

an examination of the additional benefits of an activity compared to the additional costs incurred by that same activity

a horizontal line at the market price, implying perfectly elastic demand and is equal to the demand curve.

the maximum set of output(s) that can be produced with a given set of inputs

business costs, such as rent, that are constant whatever the quantity of goods or services produced.

the cost that varies with the level of output

is the period when the general price level, contractual wage rates, and expectations adjust fully to the state of the economy

within a certain period in the future, at least one input is fixed while others are variable

the extra output or added prodcut associated with adding a unit of a variable resource (ex.labor) in the production process

as successive increments of a variable resource are added to a fixed resource, the marginal product of the variable resource will eventually decrease

A curve that graphically represents the relation between the total cost incurred by a firm in the short-run production of a good or service and the quantity produced.

equals total fixed and variable costs divided by total units produced. Average total cost curve is typically U-shaped i.e. it decreases, bottoms out and then rises.

A curve that graphically represents the relation between average fixed cost incurred by a firm in the short-run product of a good or service and the quantity produced.

A curve that graphically represents the relation between average variable cost incurred by a firm in the short-run product of a good or service and the quantity produced.

the quantity of output at which average total cost is lowest

the quantity that corresponds to the minimum average total cost (ATC).

a business metric that represents the average cost per unit of output over the long run, where all inputs are considered to be variable and the scale of production is changeable.

the phenomenon where the average costs per unit of output decrease with the increase in the scale or magnitude of the output being produced by a firm.

when the output increases in a greater proportion than the increase in input

when a company or business grows so large that the costs per unit increase

when all production variables are increased by a certain percentage resulting in a less-than-proportional increase in output

when an increase in input results in a proportional increase in output

an individual or company that must accept prevailing prices in a market, lacking the market share to influence market price on its own

In economic theory, perfect competition occurs when all companies sell identical products, market share does not influence price, companies are able to enter or exit without barrier, buyers have perfect or full information, and companies cannot determine prices.

a product that regardless of what company furnishes the good, consumers regard the product furnished by all the companies as identical.

Free entry is a term used by economists to describe a condition in which can sellers freely enter the market for an economic good by establishing production and beginning to sell the product

a situation where there is a single seller in the market

factors which prevent or deter the entry of new firms into an industry even when incumbent firms are earning excess profits.

exists in a particular market if a single firm can serve that market at lower cost than any combination of two or more firms.

a market characterized by a small number of firms who realize they are interdependent in their pricing and output policies.

any economic market that does not meet the rigorous assumptions of a hypothetical perfectly competitive market.

an industry in which many firms offer products or services that are similar (but not perfect) substitutes.

the price at which the cost to manufacture a product is equal to its sale price

the minimum price a business needs to justify remaining in the market in the short run.

the cost price which has short-term inferences in the manufacturing procedures,

the individual's marginal cost at all points greater than the minimum average variable cost

graphic representation of the relationship between product price and quantity of product that a seller is willing and able to supply.

a situation in which, given the firms in the market, the price is such that that total amount the firms wish to supply is equal to the total amount the consumers wish to demand.

a theoretical concept in which all markets are in equilibrium, and all prices and quantities have fully adjusted and are in equilibrium.

a property of an efficient market whereby all goods and services are optimally distributed among buyers in an economy.

a level at which an economy or entity can no longer produce additional amounts of a good without lowering the production level of another product.

an industry where each firm's costs aren't impacted by the entry or exit of new firms.

industries that experience an increase in average costs when expanding (output increases)

one that is distinguished by its long run supply curve being downward sloping