Production and Costs Flashcards
1
Q
Explicit Costs
A
Input costs that require expenditure of money by the firm
2
Q
Implicit Costs
A
Input costs that do not require expenditure of money by the firm
3
Q
Fixed Costs
A
Costs that do not vary with output, e.g. rent of a factory
4
Q
Variable Costs
A
Costs that vary with output, e.g. wages
5
Q
When Marginal Cost < Average Cost:
A
Average decreases
6
Q
When Marginal Cost > Average Cost:
A
Average increases
7
Q
When MPL is increasing:
A
MC is decreasing and vice versa
