# Econ chapter 12

 Marginal cost The additional cost resulting from a one unit increase in output.equation: MC= ^TC Total cost the sum of all costs of inputs used by a firm in production equation: TC = FC + VC Average total cost total cost per unit of production equation: ATC= AFC + AVC = TC/Q Fixed cost cost that is already spent and cannot be recovered. It exists only in the short runequation: FC Average fixed cost fixed costs per unit of productionequation: AFC = FC/Q Variable cost Costs that vary with productionequation: VC average variable cost variable costs per unit of production equation: AVC= VC/Q production the name givent to that transformation of factors into goods and services firm an economic institution that transforms factors of production into goods and services. it1 organizes factors of production 2 produces goods 3 sells produced goods to individuals, businesses or government accounting Profit total revenue - total cost total cost for economists explicit payments to the factors of production plus the opportunity cost of the factors provided by the owners of the firm total revenue for economists the amount a firm receives for selling its product or service plus any increase in the value of the assets owned by the firm. economic profit (explicit and implicit revenue) - (explicit and implicit cost) long run decision a firm chooses among all possible production techniques short-run decision the firm is constrained in regard to what production decisions it can make, it has fewer options in this decision comapired to long run production table a table showing the output resulting from various combinations of factors of production or inputs marginal product the additional output that will be forthcomming from an additional worker other inputs constant average product output per worker production function the relationship between the inputs (factors of production) and outputs law of diminishing marginal productivity 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 accounting profit is... economists explicit revenue less explicit cost.include implicit revenue and cost in their determination of profit implicit revenue includes... the increases in the value of assets owned by the firm. implicit costs include.. opportunity cost of time and capital provided by the owners of the firm in the long run... in the short run a firm can choose among all possible production techniques; the firm is constrained in its choices the law of diminishing marginal productivity states.. 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. costs are generally... divided into fixed costs, variable costs and total costs TC= FC + VC; MC = chaang in TC the average variable costs curve and marginal cost curve are... mirror images of the average product curve and the marginal product curve respectively the law of diminishing marginal productivity causes marginal and average cost to rise if MC > ATC, then ATC is rising if MC= ATC then ATC is..... if MC < ATC, then ATC is... constant, falling the marginal cost curve goes through the minimum points of the average variable cost curve and average total cost curve Authorndumas2 ID71371 Card SetEcon chapter 12 Descriptionterms and summary Updated2011-03-07T22:06:10Z Show Answers