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microeconomics chapter 8 and 9
Terms in this set (25)
The cost that is independent of the output level
Cost that varies with the output level.
Total Fixed Cost
Costs of fixed inputs.
Total Variable Cost
Cost of the variable inputs.
Total Cost Formula
Total Cost equals Total Fixed Cost Plus Total Variable Cost.
Marginal Cost Formula
Marginal Cost equals the change in Total cost divided by the change in quantity.
Average Cost Formula
Average Fixed Cost equals Total Fixed Cost divided by the quantity.
Average Variable Cost formula
Average Variable Cost equals Total Variable Cost divided by the quantity.
Average Total Cost Formula
Average Total Cost equals Average Fixed Cost plus Average Variable Cost.
Profit equals Total revenue divided by Total Cost.
Marginal Revenue formula
Marginal Revenue equals Change in Total Revenue divided by Change in output.
Competition or Perfect/Free Enterprises
Small Firms. Homogeneous Products, Free Enterprises, Perfect Information
Small Firms, Different Products, Free Entry and Exit, Perfect Information
3 or 4 large Firms, Single Barriers to entry and exit
Single Seller, No close substitutes for the product, Barriers to entry.
diseconomies of scale
Long-run average total cost decreases as the quantity of output increases.
economies of scale
Long-run average total cost decreases as the quantity of the output increases.
Comparing the additional benefits resulting from a decision with the marginal costs.
A time period long enough for a business to change all of its inputs (factors of production).
A period in which at least one input or factor of production is fixed.
Accounting Profits formula
Total Revenues minus Accounting Costs
are the Explicit Costs
are the explicit costs plus its implicit costs
Economic Profits formula
Total Revenues plus the Economic Costs
As one input increases while the other inputs are held fixed, output increases at a decreasing rate
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