micro 8 Flashcards
explicit or accounting costs
The actual expenditures of the firm to hire, rent and purchase inputs required for production.
implicit costs
The value of inputs owned and used by the firm in its own production activity. (ideas that are very real)
sunk costs
cost that already incurred. not affected by new decision
total cost
split into fixed (constant) and variableO
marginal cost
change in tvc / change in quantity
economies of scale
Refers to the situation in which output grows proportionally faster than inputs. (more out of production)
economies of scope
Refer to the lowering of costs that a firm often experiences when it produces two or more products together rather than each alone. (ex: iphones and ipads)
learning curve
Shows the decline in average input cost of production with rising cumulative total output over time.
foreign sourcing of input
Looking abroad for cheaper inputs.
new international economies of scale
Constant exploration of sources of cheaper inputs and overseas production.
immigration of skilled labor
Brain drain for developing countries: loss of skilled labor due to migration.
operating leverage
ratio of total fixed cost to total variable costs
