Vocabulary Flashcards
Average fixed cost
Fixed costs per unit of output.
Defenition of average fixed cost.
Fixed cost per unit of output.
Average revenue
Revenue per unit of output, equal to the price of the product in perfect competition.
Average total cost
Total costs per unit of output.
Average variable cost
Variable costs per unit of output.
Defenition of exogenous.
External to the firm, beyond the control of the manager or the firm.
Defenition of endogenous.
Internal to the firm, may be controlled by the firm manager.
Factor product model
A very simple profit maximizing model of the firm with one variable input and one output.
Economic efficiency
Output per dollar of input cost. A decrease in costs per unit is an increase in como if efficiency.
Rotational range of production
The rational firm will always produce at output levels for which the average variable cost is increasing and for which the marginal returns are not negative.
Marginal cost
the additional cost of producing one additional unit of output
Marginal revenue
Additional revenue associated with one additional unit of output, equal to the price of the product in perfect competition.
Break- even point
Product price for which the economic profits of the firm are zero.
Shutdown point
Product price for which the firm would cease production, equal to the minimum average variable cost.
Total revenue
Total receipt from the sale of the output or product. Total revenue is equal to price of the product times number of units sold.
