Chapter 7 Microeconomics (Exam 3)

The actual cash payments for resources purchased in resource markets

The opportunity costs for resources owned by the firm or provided by the firm's owners

total revenue minus explicit costs

accounting profit minus implicit costs

it is said to be making a normal profit because all relevant opportunity costs are exactly covered

if it cannot cover all relevant opportunity costs

is one that cannot be varied in the short run

is defined as the period for which at least one resource is fixed

is one that is easily varied. In the long run, all inputs are variable resources.

is the law of diminishing marginal returns

the firm must change one or more of its variable inputs.

output increases

The extra output produced when an additional unit of a variable resource is combined with a fixed resource

that eventually marginal physical product will get smaller as additional units of the variable resource are combined with the fixed resource

obligations that exist even if the firm is not producing any output and that do not change as output increases.

when output is zero and increase as output increases

is the sum of fixed and variable costs

the change in total cost that results when output changes by one unit

marginal cost. Since the firm can alter variable and total costs by changing output.

a planning period during which all inputs can be varied, a new firm can be started, or a firm can go out of business

the envelope of the least-cost segments of the short-run average cost curves for each output level. 

the best method of production for every possible rate of output and select the scale of plant that is best for the desired rate of output

U-shaped

identifies the maximum quantity of a good that can be produced by various combinations of resources.

a curve defined by points that indicate various combinations of two inputs that yield the same quantity of output

the marginal rate of technical substitution of one resource for the other, and also equals the negative of the ratio of the marginal physical products of the resources

It identifies all combinations of two resources the firm can buy for a given total cost. Its slope is minus the ratio of the prices of the resources.

a new expansion path.