# Shared Flashcard Set

## Details

Microeconomics
Terms and Definitions for Microeconomics
14
Economics
01/16/2013

## Additional Economics Flashcards

Term
 Short Run
Definition
 A period of time where at least one factor of production is assumed to be in fixed supply i.e. it cannot be changed.
Term
 Long Run
Definition
 A period of time where all factors of production are variable and can be changed.
Term
 Fix Factors
Definition
 Fixed factors are factors of production whose levels are held fixed in a time period and whose services do not vary with the amount of output produced. This is usually the case only in the short run.
Term
 Variable Factors
Definition
 Inputs whose quantity can be changed in the time period under consideration. A variable factor of production provides the extra inputs that a firm needs to expand short-run production. eg. Labor
Term
 Law of Diminishing Returns
Definition
 Is the decrease in the marginal (per-unit) output of a production process as the amount of a single factor of production is increased, while the amounts of all other factors of production stay constant.
Term
 Marginal Cost
Definition
 MC is the increase in total cost of producing an extra unit of output.  MC=ΔTC/Δq
Term
 Marginal Product
Definition
 is the extra output that produced by using an extra unit of the variable factor. MP=ΔTP/ΔV where ΔTP=change in total ouput and ΔV= change in the number of units of the variable factor employed.
Term
 Average Total Cost
Definition
 is the total cost per unit of output. It is equal to AFC plus AVC. ATC=TC/q where q is the level of ouput.
Term
 Average Variable Cost
Definition
 is the variable cost per unit of output.  AVC=TVC/q where q= level of output.
Term
 Average Fixed Cost
Definition
 is the fixed cost per unit of output. AFC=TFC/q where q= level of output.
Term
 Economies of Scale
Definition
 are any falls in long run average costs that come about when a firm alters all of its factors of production in order to increase its scale of output. They lead to the firm experiencing returns to scale.
Term
 Diseconomies of Scale
Definition
 are any increase in long run average cost that come about when a firm alters all of its factors of production in order to increase its scale of output. They lead to the firm experiencing decresing returns to scale.
Term
 Normal Profit
Definition
 Is the difference between a firm's total revenue and its opportunity costs.
Term
 Abnormal Profit
Definition
 is profit that exceeds normal profit (defined as equal to opportunity cost of labour and capital)
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