Econ151 ch4-6 Vocab Flashcards
Implicit costs
The opportunity cost of the firm’s self-owned and self-employed resources inputs
Explicit costs
Money payments to input resources
Accounting profits
Total revenue minus explicit costs
Normal profit
Minimum accounting profit necessary to keep the firm operating in its current undertaking. Just enough to make worthwhile
-it is an implicit cost
Economic profit
Profit in excess of normal profith
Variable Inputs
Factors of production that are used or employed directly with changes in the firms level of output
Fixed Input
Factors of production that do not change in the firm’s level of output
Marginal Product
The change in output resulting from employing an additional unit of a variable input
Economies of Scale
Reductions in the average total as the firm expands the size of the plant(output)
Diseconomies of Scale
Increases in the average total cost of producing a product as the firm expands the size of its plant(output) in the long run
Explicit cost
The monetary payment a firm makes to obtain a resource
Implicit Cost
The monetary a firm sacrifices when it uses a resource it owns rather than supplying the resource in the market
Marginal Cost
The extra(additional) cost of producing 1 more unit of output;
Marginal Product
The additional output produced when1 additional unit of a resource is employed
Elasticity of Demand/Supply
Inelastic
- large change in price
- small change in quantity
