Chapter 13 - The cost of production Flashcards
AFC average fixed cost
Fixed costs divided by quantity
ATC Average total cost
Total cost divided by the quantity
AVC average variable cost
Variable cost divided by quantity
Constant returns to scale
The property where by long-run average total cost stays the same as the quantity of output changes
Diminishing marginal product
The property whereby the marginal product of an input declines as the quality of the input increases
Diseconomies of scale
The property where by long-run average total cost rises as the quantity of out put increases
Economic profit
Total revenue minus total cost including both explicit and implicit costs
Economies of scale
- average cost declines in the long run
- The property where by long-run average total cost falls as a quantity of out put increases
Efficient scale
The quantity of who put that Minimizes average total cost
Explicit cost
Input costs that require money by the firm
Fixed costs
Costs that do not vary with the quantity of output produced
Implicit costs
Input costs that do not require money by the firm (opportunity costs)
Marginal cost
The increase in total cost that arises from an extra unit production
Marginal product
The increase in out put that arises from an additional unit of input
Production function
The relationship between the quantity of inputs used to make a good and the quantity of output of that good
