4 Flashcards
fixed resources
resources that don’t change with the quantity produced
eg oven, sign, table
variable resources
resources that do change
eg workers, electricity, dough
short run
a period in which at least one resources are fixed
long run
all resources are variable
total physical product
total output or quantity produced
marginal product
the additional output generated by additional inputs(workers)
marginal product = (equation)
change in total product/
change in inputs
fixed costs
costs for fixed resources that dont change with the amount produced
eg rent insurance
variable costs
cost for variable resources that do change as more or less is produced
eg raw materials labor
total cost
fixed plus variable costs
marginal cost
additional costs of an additional output
if your fixed costs goes up what happens to the graph
afc and atc goes up
when variable costs goes up what happens to the graph
avc atc and mc goes up
accounting profit
accounting costs(explicit costs)-total revenue
economic profit
total revenue- economic costs( explicit and implicit costs)
perfect competition mr=
mc
perfect competition
many small firms identical product low barriers seller no need to advertise seller has no control over price
in a competitive firm mr=
d=average revenue = p
the shut down rule
when the price falls bellow avc then the firm should minimize its losses by shutting down
per unit
tax or subsidy is effects the variable costs so mc avc and atc will shift
lump sum
tax or subsidy only effects foxed costs so only afc and atc will shift mc will stay the same
in the long run…
firm will enter if the theres profit or leave if not
all firms break even they make no economic profit = normal profit
monopolies are inefficient because
charge a higher price
dont produce enough
produce at higher costs
where is consumer surplus and producer surplus
cs is top triangle of demand and price ps is bottom triangle inside price and quantity and mc
