Micro Chapter 9; Making decisions

19 terms by kdaigle56 

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explicit costs

costs that involves actually laying out of money; money i spent to go to school

implicit cost

does not require an outlay of money: money i would have earned if not in school

accounting profit

business is the business's revenue minus the explicit cost and depreciation

economic profit

business is the business's revenue minus the opportunity cost of its resources

capital

business is the value of an asset

implicit cost of capitol

opportunity cost of the capitol used by a business

marginal cost

producing a good or service is the additional cost incurred by producing one more unit of that good or service

constant marginal cost

when each additional unit costs that same to produce as the previous one.

marginal cost curve

shows how the cost of producing one more unit depends on the quantity that has already been produced

increasing marginal cost

when each additional unit costs more to produce that the previous one

marginal benefit

good or service is the additional benefit derived from producing one or more good or service

decreasing marginal benefit

activity when each additional unit of the activity produces less benefit than the previous one

marginal benefit curve

shows how the benefit from producing one more unit depends on quantity that has already been produced

optimal quantity

quantity that generates the maximum possible total net gain

principle of marginal analysis

optimal quantity is the quantity at which marginal benefit i equal to marginal costs

sunk cost

cost has already been incurred and in nonrecoverable

interest rate

price calculates as a % of the amount borrowed, charged by the ender

present value formula

amount of money you must kend out to make sure you have the same as when you started

net present value

present value of current ad future benefits minus the present value of current and future costs

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