Elasticity/Production Cost

  1. Price Elastic
    • is a more than 1 percent change in Qd in response to a 1 percent change in price (P,TR inverse)
    • Ed > 1
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  2. To calculate Elasticity (Ed)
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    • Image Upload 3
  3. Price Inelastic
    • is a less than 1 percent change in Qd in response to a 1 percent change in price (P,TR direct)
    • 0<Ed<1
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  4. Unit Elastic
    • is a 1 percent change in Qd in response to a 1 percent change in price (TR, unchanged,TR maximized)
    • Ed=1
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  5. Perfectly Elastic
    An extreme case in which the demand curve is horizontal and the elasticity coefficient equals infinity
  6. Perfectly Inelastic
    An extreme case in which the demand curve is vertical and the elasticity coefficient equals 0
  7. Explicit Costs
    the actual payments a firm makes to its suppliers of inputs
  8. Implicit Costs
    the firms oppertunity costs of all the resources supplied by the firms owners
  9. TFC, TVC, TC
    TC = TFC+TVC
  10. TR
    TR=QxP
  11. Accounting Profit
    TR - Explicit Costs
  12. Economic Profit
    TR - (Explicit + Implicit)
  13. ATC, AVC, AFC
    • ATC=TC/Q
    • AVC=TVC/Q
    • AFC=TFC/Q
  14. Marginal Cost
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    • or, Image Upload 7
Author
Kencollins08
ID
134016
Card Set
Elasticity/Production Cost
Description
Elasticity/Production cost
Updated