Costs Flashcards
Diseconomies of scale?
A rise in long run average costs of production as output rises.
Average cost?
The average cost of production per unit, calculated by diving total cost by the quantity produced. Average fixed cost + average variable cost.
Economic cost?
The opportunity cost of an input to the production process.
Economies of scale?
A fall in the long run average cost of production as output rises.
External economies of scale?
Falling average costs of production, shown by a downward shift in the average cost curve, resulting from an increase in the size of an industry within which the firm operates.
Fixed or indirect or overhead costs?
Costs which do not vary as the level of production increases or decreases.
Imputed cost?
An economic cost which a firm does not pay for with money to another firm but is the opportunity cost of production which the firm itself owns.
Internal economies of scale?
Economies of scale which arise because of a growth in the scale of production within a firm.
Marginal cost?
The cost of producing one extra init of output.
Minimum efficient scale of production?
Lowest level of output at which long run average cost is minimised.
Optimum level of production?
The range of output over which long run average cost is lowest
Total cost?
The cost of producing any level of output. It is equal to total variable costs + total fixed costs.
Variable or direct or prime costs?
Costs which vary directly in proportion to the level of output of a firm.
