Test #3 Flashcards
The opportunity costs of using resources owned by the firm
Implicit Cost
Payments to nonowners of a firm for their resources
Explicit Cost
Firms leave industry
Economic Loss
Firms enter industry
Economic Profit
Industry remains stable
Zero Economic Profit
What equals ATC and AVC at their minimum?
Marginal Cost
What do you get with at least one fixed input?
Short run
What do you get when all inputs are variable?
Long run
Name characteristics of perfect competition.
Many small competing firms, produces a homogenous product, easy to enter and exit this type of industry
As output increases the long run average total cost decreases
Economies of Scale
As output increases the long run total cost remains constant
Constant Returns to Scale
As output increases the long run average total cost increases
Diseconomies of Scale
The minimum profit necessary to keep a firm in operation
Normal Profit
Below the minimum profit necessary to keep a firm in operation
Zero Profit
Total revenue minus explicit and implicit cost equals what?
Economic Profit
Total revenue minus total opportunity costs equals what?
Economic Profit
Total revenue minus total explicit costs equals what?
Accounting Profit
Any resource for which the quantity can change during the period of time under consideration
Variable Input
Any resource for which the quantity cannot change during the period of time under consideration
Fixed Input
The principle that beyond some point the marginal product decreases as additional units of a variable resource are added to a fixed factor
Law of Diminishing Returns
When marginal return goes through the minimum point of ATC
Zero economic profit
this is the break even point
