Econ 101 chapter 8 Flashcards
business firm
an entity that employs factors of production to produce goods and services to be sold to consumers, other firms, or the government
market coordination
the process in which individuals perform tasks such as producing goods on the basis of changes in the market forces
managerial coordination
the process which managers direct employees to perform certain tasks
shrinking
the behavior of workers putting in less work than agreed to
residual claimant
persons who share in the profit of a business firm
profit
total revenue - total cost
explicit cost
the cost incurred when actual payment is made
implicit cost
cost that represents the value of resources used in production for which no actual payment is made
accounting profit
total revenue - explicit cost
economic profit
total revenue - total cost (including explicit and implicit costs)
normal profit
zero economic profit, level of profit needed to keep resources employed in a firm
will individuals form teams or firms in all settings?
no, only when the sum of what they can produce is greater than working alone
is accounting profit or economic profit larger?
accounting profit
fixed input
input whose quantity can’t be changed, no matter the output
variable input
input whose quantity can be changed as output changes
