Chapter 4&5 - The Cost of Production Flashcards
1
Q
Production Function
A
2
Q
Explicit costs
A
input costs that require a direct outlay of money by the firm are included in the accounting system (e.g. salaries, gasoline, etc.)
3
Q
Implicit costs
A
input costs that do not require directly an outlay of money by the firm are not included in the accounting system (e.g. external / social costs like health cost due to pollution)
4
Q
MC and ATC in a Graph
A
o Whenever MC < ATC, ATC is falling
o Whenever MC > ATC, ATC is rising
o The MC curve crosses the ATC curve at the efficient scale.
5
Q
TC in non- and competitive markets
A
6
Q
AC in non- and competitive markets
A
