Ch 12 Flashcards
Suppose Drink Well produces flavored water in a rented space using their private well, purchased bottles, and hired hourly labor. They buy advertising services from a marketing company for a fee based on sales. The owners used $100,000 of their savings to start the company. Implicit costs include…
water and foregone interest on savings
Some businesses refer to their double or triple bottom line, saying that they value ___ and/or ___ impacts in addition to dollars.
Social; environmental
The ___ is the amount that a firm receives from the sale of goods and services.
Total revenue
The ___ is the amount that a firm pays for all of the inputs that go into producing goods and services.
total cost
A firm’s ___ is the difference between total revenue and total cost.
Profit
___ is equal to quantity of outputs multiplied by price per output
Revenue
___ are costs that don’t depend on the quantity of output produced
Fixed costs
___ are costs that depend on the quantity of output produced, such as raw materials that go into production and labor costs.
Variable costs
The opportunity cost of operations can be split into two categories: ___, which are costs that require the firm to spend money, and ___, which are costs that represent forgone opportunities.
Explicit costs; Implicit costs
___ is calculated as total revenue minus explicit costs.
Accounting profit
___ is calculated as total revenue minus explicit costs minus implicit costs.
Economic profit
The ___ is the relationship between the quantity of inputs and the quantity of outputs.
production function
The ___ is the increase in output that is generated by an additional unit of input.
marginal product
Holding all other inputs constant, the marginal product of a particular input ___ as the quantity of that input increases.
decreases
(Diminishing Marginal Product)
The ___ is the number of outputs produced per worker.
Average product
