Law of Diminishing Marginal Returns Flashcards
LDMR
1
Q
What is true about Total Fixed Cost?
A
-Only in the short run
-They have to be paid
-They never change
2
Q
What are Explicit Costs?
A
They are costs that can be seen as expenses.
3
Q
What are Implicit Costs?
A
They are opportunity costs.
4
Q
How do you calculate total explicit costs?
A
Add up all the explicit costs
5
Q
How do you calculate total implicit cost?
A
Add them all up (implicit costs)
6
Q
Accounting Profit
A
=TR-EC (Total Rev.-Explicit Cost)
7
Q
Economic Profit
A
=TR-(EC+IC)
EC= Explicit Cost
IC= Implicit Cost
