Chapter 11- The Firm: Production and Costs Flashcards

1
Q

Explicit Costs

A

the opportunity costs of production that require a monetary payment

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2
Q

Implicit Costs

A

the opportunity costs of production that do not require a monetary payment

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3
Q

profits

A

the difference between total revenues and total costs

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4
Q

accounting profits

A

total revenues minus total explicit costs

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5
Q

economic profits

A

total revenues minus explicit and implicit costs

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6
Q

sunk costs

A

costs that have been incurred and cannot be recovered

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7
Q

fixed costs

A

costs that so not vary with the level of output

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8
Q

total fixed costs(TFC)

A

the sum of the firms fixed costs

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9
Q

variable costs

A

costs that vary with the level of outputs

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10
Q

total variable cost(TVC)

A

`the sum of the firms variable costs

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11
Q

total cost(TC)

A

the sum of the firms total fixed costs and total variable costs

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12
Q

average total cost(ATC)

A

a per-unit cost of operation; total cost divided by output

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13
Q

average fixed cost(AFC)

A

a per-unit measure of fixed costs; fixed costs divided by output

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14
Q

average variable cost(AVC)

A

a per-unit measure of variable costs; variable costs divided by output

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15
Q

marginal cost(MC)

A

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

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16
Q

Profits are defined as_______ minus _____

A

total revenues, total costs

17
Q

Explicit costs are input costs that require a _____payment

A

monetary

18
Q

Economists generally assume that the ultimate gal of a firm is to _______ profits

A

zero

19
Q

Accounting profits equal actual revenues minus actual expenditures of cash (explicit costs), so they do not include _____ costs.

A

Implicit

20
Q

Economists consider a zero economic profit a normal profit because it means that the firm is covering both _____ and ______costs-the total opportunity cost of its resources.

A

explicit, implicit

21
Q

_____ costs are costs that have already been incurred and cannot be recovered

A

sunk

22
Q

the short-run total costs of a business fall into two distinct categories:_____ costs and _____ costs.

A

fixed, variable

23
Q

fixed costs are costs that ________ with the level of output.

A

do not vary

24
Q

the sum of a firms fixed costs is called it_____.

A

total fixed costs

25
Q

Costs that are not fixed are called _____ costs.

A

variable

26
Q

The sum of a firms variable costs is called its ____.

A

total variable cost

27
Q

the sum of a firms total _____ costs and total _____ costs is called its total cost.

A

fixed, variable

28
Q

Average total cost equals ______ divided by the _____ produced.

A

total cost, output

29
Q

Average fixed cost equal ____ divided by the ____ produced.

A

fixed costs, output

30
Q

_____ equals total variable cost divided by the level of output produced

A

Average variable cost

31
Q

marginal costs are the _____ costs associated with the “last” unit of output produced.

A

change in total cost

32
Q

The reason for high average total costs when a firm is producing a very small amount of output is the high_____costs.

A

total