Chapter 5- Section 3 Flashcards
Overhead is what?
Total fixed cost
The cost that a business incurs even at the plant is idle and output is zero
Fixed cost
What do fixed costs include?
Salaries paid to executives, interest charges on bonds, rent payments on lease properties, and local and state property taxes they also include deprecation, the gradual wear and tear on capital goods over time and through use
A cost that changes when the business rate of operation are output changes
Variable costs
Variable costs are generally associated with what?
Labor and raw materials
Sum of the fixed and variable costs
Total cost
The extra cost incurred when a business produces one additional unit of a product
Marginal cost
Electronic business or exchange conducted over the Internet
E-commerce
Number of units sold multiplied by the average price per unit
Total revenue
The extra revenue associated with the production and sale of one additional unit of output
Marginal revenue
A type of cost-benefit decision making that compares the extra benefits to the extra cost of an action
Marginal analysis
The total output or total product business needs to sell in order to cover its total costs
Break-even point
Reached when marginal cost and marginal revenue are equal
Profit maximizing quantity of output
