Cost Theory Flashcards
Important consideration in production is
Cost
_______ in the production process has a direct impact on cost
Inefficiency
refers to the desire to profit from a project, transaction, or material endeavor
Profit Motivation
_____ defined the profit motive in economics in his book “_____ of _____” as the human _______ to truck, barter and trade.
Adam Smith
The Wealth of Nations
proclivity
Henry Haslet argues if there is __ profit in producing an article, it indicates that the labor and capital spent on its creation are _____ _____.
no
being wasted
the primary mechanism by which markets overcome the profit maximization incentive of individual firms
Competition
is the total cost of all items purchased by your organization
Accounting Cost
the annual total of all costs associated with conducting business. They are input costs that require an outlay of money by the firm.
Explicit Cost
Economic cost is beneficial tool for making _____ _____
business decisions
enables you to examine a number of what-if situations and determine the precise impact on your organization
Economic Cost
determined by examining your current resources and estimating their prices, as well as the impact on your organization. They are input costs that do not require an outlay of money by the firm.
Implicit Cost
the difference between the revenue received from the sale of an output and the costs of all inputs used, as well as any opportunity costs
Economic Profit
a form of implicit cost that management determines and varies according to various events and perspectives.
Opportunity Cost
refers to the profit in business reports on its income statement.
Accounting Profit
Accounting profit is essential for companies’ ______ _______
financial transparency
Economic Profit is _____ _____ to regulators, investors, or financial institutions and is not required to be reflected on _______ _______.
not disclosed
financial statements
When faced with production level or other business alternatives, businesses and individuals make choices to ______ _____ ______.
prioritize economic profit
a sort of what-if analysis.
Profitability analysis
may be used to compare to the income that would have been gained had a different alternative been chosen.
Economic Profit
the creation or extraction of value
Entrepreneurship
Entrepreneurs are viewed as _____ _____
national assets
Great entrepreneurs have the capacity to ___ the ___ ____ ____ and work
alter the way we live
discoveries may raise _____ ____while also creating wealth from _____ _____ and contributing to a rising economy
living standards
entrepreneurial endeavors
costs that do not change with an increase or decrease in the amount of goods or services produced or sold
Fixed Cost
