Econ chapter 12

• The additional cost resulting from a one unit increase in output.
• equation: MC= ^TC

• the sum of all costs of inputs used by a firm in production
• equation: TC = FC + VC

• total cost per unit of production
• equation: ATC= AFC + AVC
• = TC/Q

• cost that is already spent and cannot be recovered. It exists only in the short run
• equation: FC

• fixed costs per unit of production
• equation: AFC = FC/Q

• Costs that vary with production
• equation: VC

• variable costs per unit of production
• equation: AVC= VC/Q

the name givent to that transformation of factors into goods and services

• an economic institution that transforms factors of production into goods and services. it
• 1 organizes factors of production
• 2 produces goods
• 3 sells produced goods to individuals, businesses or government

total revenue - total cost

explicit payments to the factors of production plus the opportunity cost of the factors provided by the owners of the firm

the amount a firm receives for selling its product or service plus any increase in the value of the assets owned by the firm.

(explicit and implicit revenue) - (explicit and implicit cost)

a firm chooses among all possible production techniques

the firm is constrained in regard to what production decisions it can make, it has fewer options in this decision comapired to long run

a table showing the output resulting from various combinations of factors of production or inputs

the additional output that will be forthcomming from an additional worker other inputs constant

output per worker

the relationship between the inputs (factors of production) and outputs

states that as more and more of a variable input is added to an existing fixed input, eventually the additional output one gets from that additional input is going to fall

• explicit revenue less explicit cost.
• include implicit revenue and cost in their determination of profit

the increases in the value of assets owned by the firm.

opportunity cost of time and capital provided by the owners of the firm

• a firm can choose among all possible production techniques;
• the firm is constrained in its choices

that as more and more of a variable input is added to a fixed input the additional output the firm gets will eventually be decreasing.

divided into fixed costs, variable costs and total costs

chaang in TC

mirror images of the average product curve and the marginal product curve respectively

marginal and average cost to rise

constant, falling

the minimum points of the average variable cost curve and average total cost curve