# Shared Flashcard Set

## Details

Econ 101 Final
n/a
21
Economics
06/07/2011

Term
 Explicit Cost
Definition
 opportunity cost of actual lost dollars
Term
 Implicit Cost
Definition
 opportunity cost in benefits that are foregone
Term
 Accounting Profit
Definition
 revenue minus the explicit costs and depreciation
Term
 Economic Profit
Definition
 revenue minus the opportunity cost of its resources
Term
 Marginal Cost
Definition
 additional cost incurred by doing one more unit of that activity
Term
 Marginal Benefit
Definition
 additional benefit derived from undertaking one more unit of that activity
Term
 Optimal Quantity
Definition
 generates the maximum possible total net gain
Term
 Principle of Marginal Analysis
Definition
 the optimal quantity of an activity is the quantity at which marginal benefit is equal to marginal cost, and where the marginal benefit curve intersects with the marginal cost curve
Term
 Production Function
Definition
 relationship between quantity of inputs used and quantity of outputs produced
Term
 Fixed Input
Definition
 quantity cannot be varied
Term
 Variable Input
Definition
 quantity can be varied
Term
 Total Product Curve
Definition
 shows how the quantity of output depends on the quanity of the variable input, for a given amount of the fixed input
Term
 Marginal Product
Definition
 additional quantity of output that is produced by ising one more unit of that input   MPI = ΔQ/ΔI
Term
 Diminishing Returns to an Input
Definition
 an increase in quantity of that input leads to decline in marginal product of that input, quantity of all othe inputs fixed
Term
 Fixed Cost, Variable Cost, & Total Cost
Definition
 TC= FC+VC
Term
 Marginal Cost
Definition
 MC = ΔTC/ΔQ   tells producer how much the last unit of outout costs to produce
Term
 Average Total Cost
Definition
 ATC = TC/ Q (of output produced)   tells producer how much average unit of output costs to produce
Term
 Average Fixed/ Variable Cost
Definition
 fixed/variable cost per unit of output
Term
 Minimum-cost Output
Definition
 quantity of output which average total cost is lowest (bottom of u-shape average total cost curve)
Term
 Economies of Scale
Definition
 long-run average total cost declines as output increases (increasing returns to scale)
Term
 Diseconomies of Scale
Definition
 long-run average total cost increases as output increase (decresing returns to scale)
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