3.3
Output is increasing at a faster rate than all inputs
What are increasing returns to scale?
Long run average total cost is constant as output increases
What are constant returns to scale?
When a firm earns just enough revenue to cover implicit and explicit costs, it is called
What is normal profit?
Firms produce as long marginal revenue is greater than marginal cost
What is profit maximization?
When a firm considers shutting down, it is
What is facing a loss?
Output is increasing at a slower rate than all inputs
What are diminishing returns to scale?
Determines the number of firms in a market
What is minimum efficient scale?
The formula for total revenue
What is price times quantity?
The change in total revenue divided by the change in quantity
What is the formula for marginal revenue?
When total revenue is less than variable cost
What is a firm's shutdown point?
Output increasing at the same rate as all inputs
What are constant returns to scale?
Typical business expenses including land, labor, and capital
What are explicit costs?
The formula for total cost
What is explicit cost plus implicit cost
The change in total cost divided by the change in quantity
What is marginal cost?
A firm will stay open when
When is total revenue greater than or equal to total cost?
Long run average total cost decreases as output increases
What are economies of scale?
The income an entrepreneur gives up to take on their current endeavor
Incentive for businesses to innovate, cut costs, and engage in behavior that uses societies resources effectively
What is profit?
Marginal revenue equals marginal cost
What is the formula for profit maximization?
If variable cost is greater than total revenue, but total revenue is greater than total cost
What is a firm will stay open?
Long run average total cost increases as output increases
What are diseconomies of scale?
Total revenue - (Explicit costs + Implicit costs)
What is the formula for economic profit?
Total revenue minus explicit costs
What is the formula for accounting profit?
An economic view of costs as opposed to an accounting view of costs is signified by
What is including opportunity cost when when calculating profit?
If total cost and variable cost are greater than total revenue
What is a firm will temporarily shut down?