Final Exam Flashcards
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
