Definitions
Actual monetary payments for resources purchased
What are explicit costs?
A firm's opportunity costs of using resources provided by the firm's owners are called ____.
What are "implicit costs"?
Costs that do not vary as quantity produced increases
What are fixed costs?
What is the planning curve?
Economic profit + implicit costs
What is accounting profit?
The profit necessary to ensure opportunity costs are covered
What is normal profit?
Inputs that can be increased or decreased in the short run
What are variable inputs?
Costs that change as the level of output changes
What are variable costs?
The shape of the long-run average cost curve
What is "U" shaped?
Total revenue minus total costs (implicit + explicit)
What is economic profit?
A period of time in which all factors of production and costs are variable
What is the long run?
A period of time during which at least one resource is fixed
What is the short run?
Increasing marginal returns are generally the result of ______.
What is specialization and division of labor?
At a given rate of output, marginal cost equals the slope of the _____.
What is "total cost curve"?
Fixed cost + variable cost
The increase in output that occurs when an additional unit of a resource is added, holding all other resources constant
What is marginal profit?
The additional output obtained by adding another unit of labor to the production process
What is the marginal product of labor?
What occurs when long-run average cost falls as one firm expands plant size
What are economies of scale?
The least-cost way of producing each particular rate of output is represented by the tangency points between the short-run average cost curves and the _____.
What is the "long-run average cost curve"?
Total revenue minus explicit costs
What is accounting profit?
As units of a variable input are added to a given amount of fixed inputs, the marginal product of the variable input eventually diminishes.
What is the law of diminishing marginal return?
What is shown on a firm's accounting statement
What are revenue, explicit costs, and accounting profit?
The level of output at which long run average cost stops decreasing
What is minimum efficient scale?
Intersects both the average total cost and average variable cost curves at their minimum points
What is the marginal cost curve?
Accounting profit minus implicit costs
What is economic profit?