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Microeconomics
Ch. 13
22
Economics
Not Applicable
06/29/2009

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Term
Industrial Organization
Definition
the study of how firms' decisions about price and quantities depend on the market conditions they face

change in total cost divided by change in quantity
Term
Constant Returns to Scale
Definition
the property whereby long-run average total cost stays the same as the quantity of output changes
Term
Diseconomies of Scale
Definition
the property whereby long-run average total cost rises as the of output increases
Term
Economies of Scale
Definition
the property where the long-run average total cost falls as the quantity of output increases
Term
Efficient Scale
Definition
the quantity of output that minimizes average total cost
Term
Marginal Cost
Definition
the increase in total cost that arises from an extra unit of production
Term
Average Variable Cost
Definition
Variable Cost divided by quantity
Term
Average Fixed Cost
Definition
fixed cost divided by quantitiy
Term
Average Total Cost
Definition
the cost of a typical unit of output

total cost divided by quantity
Term
Variable Costs
Definition
costs that do vary with the quantity of output produced
Term
Fixed Costs
Definition
costs that do not vary with the quantity of output produced
Term
Total-Cost Curve
Definition
the relationship between quantity produced and total costs
Term
Diminished Marginal Product
Definition
the property whereby the marginal product of an input declines as the quantity of the input increases
Term
Marginal Product
Definition
the increase in output that arises from an additional unit of input

the increase in quantity of output obtained from on additional unit of that input
Term
Production Function
Definition
the relationship between quantity of inputs use to make a good and the quantity of output of that good

Workers and Cookies
1 50
2 90
3 120
Term
Accounting Profit
Definition
total revenue-explicit costs

don't count implicit costs because no money flowing out of the firm
Term
Economic Profit
Definition
total revenue - explicit costs - implicit costs

total revenue - total cost
Term
implicit costs
Definition
input costs that do not require an outlay of money by the firm

($$ given up working job to work elsewhere)
Term
Explicit Costs
Definition
input costs that require an outlay of money by the firm

($$ spent on ingredients or wages)
Term
Total Cost
Definition
the market value of the inputs a firm uses in production

explicit costs + implicit costs
Term
Total Revenue
Definition
the amount a firm receives for the sale of its output
Term
Profit
Definition
total revenue - total cost
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