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