chp 13 Flashcards
the firms goal is to…
maximize profit
explicit costs
input costs that require an outlay of money by the firm
implicit costs
input costs that do not require an outlay of money by the firm
economic profit
total revenue minus toal cost
accounting profit
total revenue minus total explicit costs
production function
relationship between the input of making a good and the output of it
marginal product
the increase on output from an increase in input
diminishing marginal product
decrease in output from an increase in input
marginal cost
formla
the increase in total cost that arises from extra production
MC= △TC/△Q
efficient scale
the quantity of input that minimizes average total cost
economies of scale
long run average total cost falls as output increases
diseconomies of scale
long run average total cost rises as output increases
constant return to scale
long run average total cost stays the same as output changes
average total cost formula
ATC= TC/Q
