Vocabulary 2.0 Flashcards
Explicit Costs
input costs that require an outlay (spending) of money by the firm
Implicit Costs
input costs that don’t require an outlay (spending) of money by the firm
Diminishing Marginal Product
the marginal product declines as the quantity of input increases
Average Total Cost (ATC)
total cost divided by the quantity of output
Average Fixed Cost
fixed costs divided by the quantity of output
Average Variable Cost (AVC)
variable costs divided by the quantity of output
Consumer Surplus
the amount paid minus the amount the buyer is willing to pay
Price ceiling
legal maximum on the price at which a good can be sold
Price floor
legal minimum on the price at which a good can be sold
Imperfect Competition
when firms can differentiate their product in some way and how influence over the price
Competitive Market
many sellers and buyers of a homogenous product and no seller or buyer influences market price
