Types of Profit
Profit Max
Production Function
Perfect Competition
Long Run Production costs
100

What is the economic profit formula?

total revenue-(explicit +implicit costs) / economic profit

100
If MR>Mc what should the firm do?

produce more

100

When MP is above the AP what happens?

AP is rising

100

Characteristics of perfect competition 

free entry and exit in the long run and zero economic profit in the long rhn

100

what is economies of scale?

long run ATC decreases as output increases

200

Explicit costs include?

typical business expenses such as land, labor, and capital

200

If MR=MC what should the firm do?

firm should maximize its profits 
200

If the Mp is below the Ap what happens 

the AP is falling

200
when P=MC what hapepns

Allocative efficiency 

200

what is diseconomies of scale?

long run atc increase as output increases 

300

What is implicit cost?

the income the entrepreneur gives up to take on their current endeavor 

300

If MR<MC what should the firm do

the firm should produce less

300

When the mp is negative what happens to the Tp

TP decreases

300

when P = minimum ATc what happens 

Productive efficiency 

300

what is constant return to scale

long run atc is constant as output increases

400

Why would someone want to start their own business?

feeling good, being your own money, new opportunities, or potential for a greater income

400

At the current quantity that the firm is selling, the firm has Marginal Cost of $200 while Marginal Revenue is $175. Which of the following is true?

The firms profits would increase if the firms decreased quantity is sold

400

When the amp is positive but decreasing what happens to the TP

Tp will start increase at a decreasing rate

400

what are long run adjustments 

no barrie's to entry, zero economic profit in the long run, easy of entry and exit from the market

400

what is the minimum efficient scale

helps determine the number of firms in a market

500

Normal profit is when total revenue covers what?

out of pocket expenses and the entrepreneurs forgone income

500

At its current quantity, a firm finds that in order to increase potential profit, it must decrease its production. If P= price, MR = Marginal Revenue and MC = Marginal Cost, which of the following reflects the firm's current situation?

MR<MC

500

Where is the TP when the MP is at zero

it's max

500

Supply increases price decreases for a long run adjustment. true or false?

true

500

if a firms long run average total cost increases as output increases the firm is experiencing 

diseconomies of scale