3.5 cost of production Flashcards
total fixed costs
cost of the firm fixed factors of production used by a firm, the cost of land, capital and entrepreneurship (these dont change depending on output. taxes, rent)
total variable costs
the cost of the variable factor of production used by a firm. (the cost of labor, raw materials, delivery costs)
marginal cost
Change in total cost that results from a one-unit increase in total product.
total cost
sum of fixed and variable costs (tfc+tvc)
marginal product
the product made after hiring one more worker
Marginal product of labor
The change in output that result from employing an added unit of labor
increasing marginal returns
when the additional unit of a variable factor of production results in higher output per unit, all factors constant
diminishing marginal returns
when adding an input of labor increases additional output at a decreasing rate
operating cost
ongoing expenses incurred from the normal day-to-day of running a buisness
average cost
the total amount of all production costs divided by the quantity of output produced
Negative marginal return
when adding more of an input to a production process leads to a decrease in the additional output generated.
