question
What is the profit?
answer
TR-TC
question
Who sees opportunity cost?
answer
economists
question
What are the two types of cost?
answer
explicit and implicit
question
What is explicit cost?
answer
we can see it (accountants)
question
What is implicit cost?
answer
we can't see it (economists)
question
What is accounting profit?
answer
total revenue - explicit costs
question
What is economic profit?
answer
total revenue - implicit costs
question
Which is greater, economic or accounting profit?
answer
accounting
question
What does a production function show?
answer
inputs and outputs for a firm
question
What is the input for the production function?
answer
labor
question
What is it called when the production function levels out?
answer
diminishing marginal product
question
Where is MP higher?
answer
Where the production function is rising more quickly
question
What is marginal product?
answer
the additional output gained by adding 1 additional unit of input (labor)
question
How does MP act?
answer
It increases rapidly at first and then it levels out (diminishing marginal product)
question
What are two types of cost in a total cost curve?
answer
fixed and variable costs
question
What are fixed and variable costs?
answer
Fixed doesn't depend on an output (rent, electricity), variable costs depend on an output
question
What is considered the output in a total cost curve?
answer
quantity
question
How do you find the AFC?
answer
FC/Q
question
How do you find the AVC?
answer
VC/Q
question
How do you find the ATC?
answer
TC/Q
question
How do you find the total cost?
answer
FC + VC
question
How do you find the MC?
answer
change in TC divided by change in quantity
question
What always happens to AFC?
answer
it always decreases
question
What shapes are AVC and ATC?
answer
U-shaped
question
Where and what lines does the MC intersect?
answer
At the minimum oof the ATC and AVC
question
What happens to the MC over time?
answer
it increases
question
Where is the efficient scale?
answer
the minimum ATC
question
What is the LRATC and what shape is it?
answer
long run average total cost, in a U-shape
question
What is the first part of the LRATC?
answer
economies of scale
question
What is the second part of the LRATC?
answer
constant returns to scale
question
What is the third part of the LRATC?
answer
diseconomies of scale
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