Econ Chapter 7 Flashcards Preview

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Flashcards in Econ Chapter 7 Deck (26)
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1
Q

Explicit Costs

A

Opportunity cost of production that require a monetary payment
eg, out of pocket expenses like labour, materials, fuel etc

2
Q

Implicit Costs

A

Opportunity cost of production that does not require a monetary payment
eg. Money could be spent elsewhere

3
Q

Profit

A

Difference between the total cost and total revenue

4
Q

Accounting Profits vs Economic Profits

A

Accounting profits are determined by total revenue minus total cost
Economic profits are determined by total revenue minus all costs (Implicit and Explicit)

5
Q

Sunk Costs

A

Costs that have been incurred and cannot be recovered

6
Q

Short run production vs long run production

A

Short run - a period to brief for some production inputs to be varied
Long run - A period over which all production inputs are variable

7
Q

Total Product

A

The total output of a good produced by a firm

8
Q

Diminishing Marginal Product

A

as a variable input increases, with other inputs fixed, a point will be reached where the additions to output will eventually decline

9
Q

Marginal Product

A

The change in total product resulting from a unit change in input

10
Q

Total Cost

A

Sm of all total fixed costs and total variable costs

11
Q

Why do cost curves shift?

A

When either input prices, taxes and technology change

12
Q

Diseconomies of Scale

A

When the long run average total costs rises as output expands

13
Q

Constant Returns to Scale

A

When the long run average total costs do not vary with output

14
Q

Economies of Scale

A

When the Long Run Average Total Costs falls as output increases

15
Q

Relationship Between Marginal Cost and Average Variable Cost

A

When AVC is falling, marginal cost must be less than average variable cost
When AVC is rising, marginal cost is greater than average variable cost.

16
Q

Relationship Between Marginal and Average Amounts

A

If marginal is above average, average will increase

If marginal is below average, average will decrease

17
Q

Relationship between Marginal costs and Marginal Product

A

Inverse relationship, when marginal product increases, marginal costs decreases.

18
Q

Marginal Cost

A

The change in total costs resulting from a one-unit change in output

19
Q

Average Variable Cost

A

Variable costs decided by output,per unit measure of variable cost

20
Q

Average Fixed Cost

A

Fixed costs divided by output, per unity measure of fixed cost

21
Q

Average Total Cost

A

A per unit cost of operation, titan cost divided by output

22
Q

Variable Costs

A

Costs that vary with the level of output

23
Q

Total Fixed Costs

A

The sum of all fixed costs

24
Q

Fixed Costs

A

Costs that do no vary with the level of output

24
Q

Total Variable Costs

A

Sum off all the variable costs

24
Q

Total Cost

A

Sm of all total fixed costs and total variable costs