Supply & Demand
This line has an upward slope
Supply
Sum of TFC and TVC
Total Cost
Any cost that, in total, does not change when the firm changes its output.
fixed cost
A good or service that is individually consumed and that can be profitably provided by privately owned firms because they can exclude nonpayers from receiving the benefits.
Private good
Economic statements that are factual
Positive economics
This line has a downward slope
Demand
A firm's total fixed cost divided by output (the quantity of product produced).
average fixed cost (AFC)
A firm's total cost divided by output (the quantity of product produced); equal to average fixed cost plus average variable cost
average total cost (ATC)
A good or service that is characterized by nonrivalry and nonexcludability. These characteristics typically imply that no private firm can break even when attempting to provide such products. As a result, they are often provided by governments, who pay for them using general tax revenues.
Public good
Land, Labor, Capital, and Entrepreneurial Ability
4 categories of economic resources
A legally established minimum price for a good or service.
Price Floor
A firm's total variable cost divided by output (the quantity of product produced).
average variable cost (AVC)
Another term for Monetary outlay
Explicit Costs
Products or services that can be used in place of each other. When the price of one falls, the demand for the other product falls; conversely, when the price of one product rises, the demand for the other product rises.
Substitute goods
This law is when technology is fixed, and resources are of equal quality
Law of Diminishing Returns
A legally established maximum for a good or service
Price ceiling
A cost that increases when the firm increases its output and decreases when the firm reduces its output.
variable cost
Opportunity cost of using self-owned resources
Implicit costs
Products and services that are used together. When the price of one falls, the demand for the other increases (and conversely).
Complementary goods
The separation of the work required to produce a product into a number of different tasks that are performed by different workers; specialization of workers.
Division of labor
The difference between the actual price a producer receives (or producers receive) and the minimum price they would accept.
Producer Surplus
The principle that a firm will maximize its profit (or minimize its loss) by producing the output at which marginal revenue and marginal cost are equal, provided product price is equal to or greater than the average variable cost.
MR = MC rule
The amount of other products that must be forgone or sacrificed to produce a unit of the given product.
Opportunity cost
A good or service whose consumption increases when income increases and falls when income decreases, other things equal.
Normal good
The assumption that factors other than those being considered are held constant
Ceteris paribus