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Econ2
Econ
37
Economics
Undergraduate 2
03/03/2014

Additional Economics Flashcards

 


 

Cards

Term

Utility

 

Definition
The satisfaction experienced from comsuming a good.
Term
Util
Definition
One unit of utility
Term
Marginal Utility
Definition
The change in total utility from one additonal unit of a good.
Term
Law of Diminishing Marginal Utility
Definition
As the consumption of a particular good increases, marginal utility decreases.
Term
Equimarginal Rule
Definition

Pick the combination of two activities where the marginal benefit per dollar for the first activity equals the marginal benefit per dollar for the second activity.

 

Marginal Utility = Marginal Utility of Books


Price per movie  =   Price per Book              

Term
Substituation Effect
Definition
The change in quantity consumed that is caused by a change in the relative price of the good, with real income held constant.
Term
Income Effect
Definition
The change in quantity consumed that is caused by a change in real income, with relative price held constant.
Term
Budget Line
Definition
The line connecting all the combinations of two goods that exhaust a consumer's budget line.
Term
Economic Profit
Definition

Total revenue minus econmic cost.

 

economic profit = total revenue - economic cost

Term
Economic Cost
Definition
The oppurtunity cost of the inputs used in the production process; equal to explicit cost plus implicit cost.
Term
Explicit Cost
Definition
A monetary payment
Term
Implicit Cost
Definition
An oppurtunity cost that does not involve a monetary payement
Term
Accounting Cost
Definition

The explicit cost of production

 

accounting cost = explicit cost

Term
Accounting Profit
Definition

Total revenue minus accounting cost.

 

 

accounting profit = total revenue - accounting cost

Term
Marginal Product of Labor
Definition
The change in output from one additional unit of labor
Term
Diminishing Returns
Definition
As one input increases while the other inputs are held fixed, output increases at a decreasing rate.
Term
Total-Product Curve
Definition
A curve showing the relationship between the quantity of labor and the quantity of output produced, ceteris paribus.
Term
Fixed Cost (FC)
Definition
Cost that does not vary with the quantity produced.
Term
Variable Cost (VC)
Definition
Cost that varies with the quantity produced
Term
Short-Run Total Cost (TC)
Definition

The total cost of production when at least one input is fixed; equal to fixed cost plus variable cost.

 

TC = FC + VC

 

Short-Run Total Cost = Fixed Cost + Variable Cost

Term
Average Fixed Cost (AFC)
Definition

Fixed cost divided by the quanity produced

 

AFC = FC/Q

 

 

Average Fixed Cost = Fixed Cost /  Quantity Produced

Term
Average Variable Cost (AVC)
Definition

Variable cost divided by the quantity produced.

 

AVC = VC / Q

 

Average Variable Cost = Variable Cost  / Quantity Produced

Term
Short-Run Average Total Cost (ATC)
Definition

Short-run total cost divided by the quantity produced; equal to AFC plus AVC.

 

ATC = TC/Q = FC/Q + VC/Q = AFC +AVC

 

Average Total Cost = Total Cost / Quantity Produced = Fixed Cost / Quantity Produced + Variable Cost / Quantity Produced = Average Fixed Cost + Average Variable Cost

Term
Short-Run Marginal Cost (MC)
Definition

The change in short-run total cost resulting from a one-unit increase in output.

 

MC = Change in Total Cost / Change in Output

 

 

Term
Long-Run Total Cost (LTC)
Definition
The total cost of production when a firm is perfectly flexible in choosing it's inputs
Term
Long-Run Average Cost (LAC)
Definition
The long-run cost divided by the quantity produced.
Term
Constant Returns to Scale
Definition
A situation in which the long-run total cost increases proportionately with output, so average cost is constant.
Term
Long-Run Marginal Cost (LMC)
Definition
The change in the long-run cost resulting from a one-unit increase in output
Term
Indivisible Input
Definition
An input that cannot be scaled down to produce a smaller quantity of output.
Term
Economies of Scale
Definition
A situation in which the long-run average cost of production decreases as output increases.
Term

Minimum Effcient Scale

 

Definition
The output at which scale economies are exhausted
Term
Diseconomies of Scale
Definition
A situation in which the long-run average cost of production increases as output increases.
Term
Perfectly Competitive Market
Definition
A market with many sellers and buyers of a homogeneous product and no barriers to entry.
Term
Price Taker
Definition
A buyer or seller that takes the market price as given.
Term
Firm-Specific Demand Curve
Definition
A curve showing the relationship between the price changed by a specific firm and the quantity the firm can sell.
Term
Marginal Revenue
Definition
The change in total revenue from selling one more unit of output.
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