Profit
Economic profit includes both explicit costs and these.
What are implicit costs?
The mirror image of the marginal product curve is this.
What is the marginal cost curve?
The time frame when all inputs are variable
What is the long run?
This measures the sensitivity a good is to a change in price at any given quantity
What is elasticity?
If the peanut market experiences a drought at the same time Taylor Swift begins eating peanut butter every day, the price will certainly do this.
What is increase?
This type of positive profit tells us that a firm's total revenue exceeds its explicit cost
What is accounting profit?
AVC + AFC equals this
Economies of scale and this both occur in the downward sloping portion of the LRATC curve.
Increasing returns to scale
We increase prices and our total revenue increases, so we know our demand must be
inelastic
What happens to the demand for gas guzzlers when the government fines cars that don't meet emission standards?
What is decrease?
Joe pays $25,000 in annual rent, pays a worker $30,000, and incurs annual supply expenses of $20,0000. Joe could earn a salar of $50,000 if he didn't have his small buisness. If Joe earns $125,000 in revenue, we can say he is earning this type of profit.
What is normal profit?
If Average Fixed Costs are greater than this point, the firm will earn a loss
What is MR = MC?
The law of diminishing marginal returns occurs when at least one input is this.
What is fixed?
When the % Change in Quantity divided by the % Change in Price is always negative we are examining this.
What is price elasticity of demand?
A town provides a subsidy to construction companies who renovate existing homes at the same time people migrate away from the town. What will happen to the price of new homes supplied?
What is decrease?
What is accounting profit?
What is the profit-maximizing rule?
MR = MC
This occurs when marginal product is increasing at an increasing rate
What is specialization?
This tells us if good are substitutes or complements
Cross Price Elasticity
If the government subsidies wheat farmers, the supply of wheat will do this:
What is increase?
When economic profit is zero, accounting profit is always this.
What is positive?
If total revenue is increasing as output increases, marginal revenue is always
What is greater than zero?
When a firm doubles its inputs but less than doubles its output
What is decreasing returns to scale?
If we are working with an inferior good, this will be negative.
The government wants to increase producer surplus while decreasing consumer producer for a country that participates in world trade, so they use this as a tool.
What is a tariff?