Profit
Total revenues minus explicit costs, including depreciation.
What is Accounting Profit?
The sum of fixed and variable costs of production.
What is Total Cost?
Total cost divided by the quantity of output.
What is Average Total Cost?
An organization that combines inputs of labor, capital, land, and materials to produce outputs.
What is a Firm?
Mathematical equation that calculates output possible with set amount of input.
What is the Production Function?
Total revenues minus total costs.
What is Economic Profit?
Synonym for a firm’s output.
What is Total Product?
Out-of-pocket costs for a firm, payments for wages or rent.
What are Explicit Costs?
The process of combining inputs to produce outputs, ideally of a value.
What is Production?
The ownership of businesses by private individuals.
What is Private Enterprise?
Profit divided by the quantity of output produced, or profit margin.
What is Average Profit?
Cost of production that increases with the quantity produced.
What is Variable Cost?
Period of time during which at least one or more of the firm’s inputs is fixed.
What is a Short Run?
Period of time during which all of a firm’s inputs are variable.
What is a Long Run?
Change in a firm’s output when it employs more labor. MP=ΔTP/ΔL.
What is Marginal Product?
Factors of production that can’t be increased or decreased quickly.
What are Fixed Inputs?
Factors of production that can easily increase or decrease in a short period of time.
What are Variable Inputs?
Average total cost curve in the short term.
What is a Short-Run Average Cost (SRAC) curve?
Alternative methods of combining inputs to produce outputs.
What are Production Technologies?
Additional cost of producing 1 more unit. MC=ΔTC/ΔL.
What is Marginal Cost?
Income from selling a firm’s product; defined as price times quantity sold.
What is Revenue?
Opportunity cost of resources already owned by the firm and used in business.
What are Implicit Costs?
Expenditure that a firm must make before production starts and that does not change.
What are Fixed Cost?
Resources that firms use to produce their products.
What are Factors of Production (or inputs)?
Lowest possible cost of production, allowing all the inputs to production to vary so that the firm is choosing its production technology.
What is Long-Run Average Cost (LRAC) curve?