Chapter 13 Micro Final Flashcards
Implicit Costs
The owners time
Economic Profit Equation
EP= TR-TC
Economic Profit = Total Revenue- Total Cost
What are costs in terms of opportunity costs?
Implicit Costs such as time spent at the factory
Average Variable Cost Equation
Q
Q
Accounting Profit Equation
AP = TR- TEC
Accounting Profit = Total Revenue- Total Explicit Cost
Average Total Cost Equation
Q
Q
What is the difference between economic and accounting profit?
Accounting Profit has NO implicit costs
Total Cost Equation
TC = FC + VC
Total cost = Fixed Cost + Variable costs
Marginal Product
🔼L
Change in Labor
Profit Equation
Profit = TR - TC
Profit = Total Revenue- Total Cost
Production Function
Shows the relationship between Quantity of workers and Quantity of goods produced
Explicit Costs
Paying your employees
Costs in Short Run
Some factors of production do not change
Economies of Scale
The more you produce the cheaper each unit is to produce
What are 2 different ways to write the Total Revenue Equation
TR = P x Q TR= P+ TC
Total Revenue = Price x Quantity
Total Revenue = Profit + Total Cost
Costs in Long Runs
ALL factors of production can change
Marginal Cost Equation
MC = 🔼TC
——-
🔼Q
Marginal Cost = change total cost
————–
Change in Quantity
What is the difference between implicit and explicit costs?
Implicit: no money required
Explicit: requires money
Total Cost Definition
How much company pays for the assembly of the product and price of labor
What 2 things are included in the total cost of economic profit?
Explicit Cost
Implicit Cost
Average Fixed Cost
Q
Q
Diseconomies of Scale
As company grows the average cost of production increases
