1141 Definitions Flashcards
economic institution that produces or sells goods
firm
most commonly varied factor in the short run
labor
involves entrepreneurship and administration
management
materials provided by God
natural resources
man-made instruments of production
capital
basis of decisions in the production factor market
productivity
basis of consumer decisions
utility
most typical exchange in a complex society
money
exchanging one good or service for another
barter
negative profit
loss
formula for determining profit
total revenue - total cost
average fixed cost
FC/Q
average variable cost
VC/Q
product or service
output of production
law of diminishing marginal returns
“flowerpot” law
four basic factors of production
inputs of production
costs based on alternative uses of production factors
opportunity costs
costs that increase as the firm increases production
variable costs
costs that do not change in the short run or when output changes
fixed costs
cost of increasing output by one unit
marginal cost
obtaining a given output at the lowest possible cost
economic efficiency
obtaining a given output with as few inputs as possible
technical efficiency
costs of producing one unit of a good
unit production costs
a result of a firm exceeding its optimum size
diseconomies of scale
costs that remain the same even when output rises
constant costs
physical characteristics of the market within which firms interact
market structure
amount each additional unit of output adds to total cost
marginal cost
amount each additional unit of output adds to total revenue
marginal structure
most profitable point for any firm
MC = MR = P
The practice of charging different prices to different individuals
Price discrimination
When the 4 largest firms of an industry account for at least 50% of its output
the industry is an oligopoly
Prices that do not change frequently
sticky prices
