# Shared Flashcard Set

## Details

AG Econ
Test #3 NWMSU
28
Agriculture
03/17/2014

Term
 Average Costs (AC) or Average Total Cost (ATC)
Definition
 ATC = Total Cost (TC) ÷ Output   The total costs incurred by the business in the current period per unit of output.
Term
 Average Fixed Costs (AFC)
Definition
 The fixed costs incurred by the business in the current period per unit of output.   Calculated as:   AFC = Total Fixed Costs ÷ Output
Term
 Average Physical Product (APP)
Definition
 The level of output or total product produced by a business per unit of input used   Calculated as:    APP = Output
Term
 Average Revenue (AR)
Definition
 The level of revenue earned per unit of output   Calculated as:   AR = Revenue ÷ Output
Term
 Breakeven Point
Definition
 The business would be able to to meet both its fixed and variable costs of production with the revenue it recieved during the current period.   MC (Marginal Cost) = MR (Marginal Revenue) = ATC (Average Total Costs)
Term
 Fixed Costs (FC)
Definition
 Specific form of current production costs that do not with the level of output or input use.
Term
 Imperfect Competition
Definition
 Market structure when one one or more of the characteristics of perfect competition are not present
Term
 Law of Diminishing Marginal Returns
Definition
 As sucessive units of a variable input are added to a production process with the other inputs held constant, the marginal physical product (MPP) decreases.   The reason why the supply function is upward slopping.
Term
 Marginal Costs (MC)
Definition
 The change in total costs of production as the output or total product of the business is expanded.   Calculated as:   MC = Δcost ÷ Δoutput   represents the total cost of producing another unit of output
Term
 Marginal Input Cost (MIC)
Definition
 the change in the cost of a resource used in production as more of this resource is employed   i.e. The marginal input cost of fertilizer is the price of fertilizer in the market place
Term
 Marginal Physical Product (MPP)
Definition
 the change in output or total product the business would achieve in the current period by expanding the use of an input by another unit   Calculated for labor as:   Δoutput ÷ Δlabor
Term
 Marginal Revenue (MR)
Definition
 the change in revenue earned   Calculated as:   Δrevenue ÷ Δoutput
Term
 Marginal Value Product (MVP)
Definition
 the change in revenue earned by a business as it employs an additional unit of a resource, holding other resource use constant.   Calculated as:   Marginal Physical Product (MPP) x market price of a product
Term
 Perfect Competition
Definition
 Market stucture characterized by the following:   Large number of producers Homogeneous product Perfect information No barriers to entry or exit
Term
 Shutdown Output
Definition
 level of output at which average variable costs equal average revenue or the market price
Term
 Total Costs (TC)
Definition
 sum of all individual catagories of production costs during the current period.   Calculated as:   Total Variable Costs (TVC) + Total Fixed Costs (TFC)
Term
 Total Fixed Costs (TFC)
Definition
 sum of all current production costs that do not vary with the level of output or input use.   Calculated by adding up all individual fixed costs.
Term
 Total Physical Product Curve (TPP)
Definition
 The total output of goods or services produced by the firm during the current period.   i.e., total wheat produced by a wheat producer
Term
 Total Revenue (TR)
Definition
 sum of all money recieved by the business from the sell of the products it markets during the current period   Calculated as:   (Pcorn x Qcorn) + (Pwheat x Qwheat)
Term
 Total Variable Costs (TVC)
Definition
 sum of all individual catagories of production costs that do vary with the level of output or input use.   Calculated by adding up all individual variable costs
Term
 Variable Costs (VC)
Definition
 level of specific current production costs that do vary with the level of output or input use.   Calculated by multiplying price of input by quanity used
Term
 Iso-cost Line
Definition
 This line reflects the particular level of expenditures for two inputs.   The slope is the ratio of the prices of the two inputs
Term
 Iso-revenue line
Definition
 represents th rate at which the market is willing to exchange one product for another
Term
 Isoquant
Definition
 A curve that reflects the combinations of two inputs that will produce a specific level of output.
Term
 Marginal rate of product transformation
Definition
 represents the rate at which the canning of fruit must expand for a one-case increase in vegetable canning.
Term
 Marginal rate of techniqual substitution
Definition
 the rate of substitution or trade-off between two inputs in the production of a specific product.   Also represents the slope of an isquant curve.
Term
 Production possibilities frontiers
Definition
 the technically efficient combination of two products a business can produce in the current period given its existing resources and technology
Term
 Rental rate of capital
Definition
 the cost of capital broadly defined; the price you would have to pay to rent all the inputs used to produce the business's product.
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