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Microeconomics Chapter 9
Vocab
19
Business
Undergraduate 1
03/12/2009

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Term
Average Fixed Cost
Definition
Equals fixed cost divided by quantity produced. AFC=FC/Q
Term
Average Product
Definition
Output per worker. Total Product/Number of Workers.
Term
Average Total Cost
Definition
Total Cost divided by quantity produced. TC/Q.
Term
Average Variable Cost
Definition
Variable Cost divide by quantity produced. VC/Q
Term
Economic Profit
Definition
(Explicit and Implicit Revenue)-(Explicit and Implicit Cost)
Term
Firm
Definition
An economic institution that transforms factors of production into goods and services.
Term
Fixed Cost
Definition
Costs that are spent and cannot be changed in the period of time under consideration.
Term
Law of diminishing marginal productivity
Definition
As more and more of a variable input is added to an existing fixed input, eventually the additional output one gets from that additional input is going to fall.
Term
Long-run decision
Definition
A firm chooses among all possible production techniques
Term
Marginal Cost
Definition
The increase(decrease) in total cost from increasing(decreasing) the level of output by one.
Term
Marginal product
Definition
The additional output that will be forthcoming from an additional worker, other inputs constant.
Term
Production
Definition
Transformation of factors into goods and services
Term
Production function
Definition
The relationship between the inputs (factors of production) and outputs.
Term
Production Table
Definition
A table showing the output resulting from various combination of factors of production or inputs.
Term
Profit
Definition
Total Revenue-Total Cost
Term
Short-run decision
Definition
The firm constrained in regard to what production decisions can make
Term
Total Cost
Definition
Explicit payments to the factory of production plus the opportunity cost of the factors provided by the owners of the firm.
Term
Total Revenue
Definition
Amount a firm receives for selling its product or service plus any increase in the value of assets owned by the firm
Term
Variable Cost
Definition
Costs that change as output changes
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