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Microeconomics
Final Exam Terms
15
Economics
Undergraduate 2
03/12/2012

Additional Economics Flashcards

 


 

Cards

Term

 

 

Total Cost

Definition

 

 

The cost of all the inputs a firm uses in production.

Term

 

 

Fixed Cost

Definition

 

 

Cost that remains constant as output changes. (Short-Run)

Term

 

 

Varible Cost

Definition

 

 

The cost that changes as output changes (Long-Run)

Term

 

 

Total Cost Formula

Definition

 

 

TC = FC + VC

Term

 

 

Long-Run

Definition

 

 

Period of time a firm can vary all it's inputs, adopt new technologies and increase or decrease the size of it's physical plant.

Term

 

 

Short-Run

Definition

 

 

Period of time during which one firms output changes.

Term

 

 

Oppertunity Cost

Definition

 

 

Highest value alternative that must be given up to engage in an activity.

Term

 

 

Explicit Cost

Definition

 

 

Acost that involves spending money.

Term

 

 

Implicit Cost

Definition

 

 

A nonmonetary oppertunity cost.

Term

 

 

Production Function

Definition

 

 

The relationship between the inputs employed by a firm and the maximum output if can produce with the inputs.

Term

 

 

Average Total Cost

Definition

 

Total cost divided by the quantity of output produced.

 

TC/Q

 

 

Term

 

 

Marginal Product of Labor

Definition

 

 

The additional output a firm produces as a result of hiring one more worker.

Term

 

 

Law of Diminishing Returns

Definition

 

 

Priniciple, that at some point, adding more of a variable input, such as labor, to the same amount of a fixed input, such as capital, it will cause the marginal product of the wariable input to decline.

Term

 

 

Average Product of labor

Definition

 

The total output produced by a firm divided by quantity.

 

Total Output/ Q

Term

 

 

Marginal Cost

Definition

 

Change in a firm's total cost from production of one more unit of good or service.

 

MC = ◊ TC/◊ Q 

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