Chapter 7 Flashcards
1
Q
Explicit Cost
A
Cost that involves monetary payments
2
Q
Implicit Cost
A
Cost that doesn’t involve monetary payments, opportunity cost
3
Q
Accounting Cost
A
Explicit cost only
4
Q
Economic Cost
A
Explicit cost + implicit cost
5
Q
Sunk Cost
A
Cost that once incurred can’t be recovered
6
Q
Law of Diminishing Marginal Productivity
A
Marginal productivity of the variable input (labor) will eventually diminish as we hire more of that variable input beside a fixed amount of the other inputs
7
Q
Economies of Scale
A
As quantity increases, long run average total cost decreases
8
Q
Efficient Scale
A
The output range at which long run average total cost is at its minimum
9
Q
Diseconomies of Scale
A
As quantity increases, long run average total cost increases
