Week 05: Business Cost Flashcards
What is the definition of Total variable costs?
Costs that are zero, when outpput is zero, and varies when output varies.
What is the defintion of total fixed costs?
Costs that do not vary as output varies & must be paid even if output is zero.
How do I calculate for Total fixed costs?
Sike. Amount remians the same as it does not vary with output.
How do I calculate for Total Costs?
Total fixed costs (TFC)+ Total variable costs (TVC)
How do I calculate for TVC?
Total costs-total fixed costs
How do I calculate for Average variable costs?
Total Variable costs/Quantity
How do I calculate for Marginal Costs?
Change in total costs/change in Quantity
How do I calculate accounting profit?
Total Revenue-Explicit costs
How do I calculate economic profit
Total rev-explicit costs-implicit costs
ex of implicit costs: Tom’s forgone salary from his last job or Interest forgone on bank deposits
What is the definition of a variable input?
These are resources whose quantities cane be changed in the short run.
What is the definition of a fixed input
These are resources who can not be changed in the short run.
What is a production function?
The relationship between the max amounts of outputs a firm can produce and various quanities of inputs.
What is a short run?
A period so short that there is at least one fixed input
What is a long run?
A period so long that all inouts become variable.
