Final Exam Flashcards
(38 cards)
Diminishing Marginal Returns
the decrease in the marginal output of production as input is incrementally increased
Fixed Cost
expenditure that must be made before production starts and that does not change regardless of the level of production
Marginal Product of Labour
the amount of output an additional worker can produce
Variable Costs
cost of production that increases with the quantity produced
Break-even Point
average total costs are equal to the market price, and the firm makes no money
Shut-down Point
average variable costs are greater than the market price, and the firm is unable to cover the variable costs of production
Entry
when firms enter a maarket enticed by positive profits, increasing supply and causing prices to fall
Exit
whe firms leave a market due to losses, decreasing supply and causing prices to rise
Economic Profits
total revenues minus total costs (including opportunity costs)
Accounting Profits
total revenues minus explicit costs, including depreciation
Average Product of Labour
the average amount of output each worker can produce; total product / total output
Average Total Cost
total cost divided by the quatity of output
Average Variable Costs
variable costs divided by quantity of output
Short Run
a period of time in which at least one cost factor is fixed
Total Cost
the sum of fixed and variable coassts of production
Long Run
the period of time when all costs are variable
Constant Returns to Scale
expanding all inputs proportionately does not change the average ccost of production
Deseconomies of Scale
the long-run average cost of producing each individual unit increases as total output increases
Long-Run Average Cost Curve
shows the lowest possible average cost of production, allowing all the inputs to production to vary so that the firm is choosing its production technology
Production Technologies
alternative methods of combining inputs to produce output
Short-Run Average Cost Curve
the average total cost curve in the short term; shows the total of the average fixed costs and the average variable costs
Marginal Revenue
the increase in revenue resulting from a marginal increase in quantity
Monopoly
a situation in which one firm produces all of the output in a market
Single-Priced Monopoly
a monopolist that can only charge one price
