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ECON201B Chapter 6
Terms in this set (9)
Roy opens up a latte stand for two hours during the most common break between final exams at his college. He spends $10 for ingredients and sells $60 worth of lattes. In the same two hours, he could have washed his neighbor's cars for $40. Roy has an accounting profit of __ and an economic profit of__.
A firm's ______________ consist of expenditures that must be made before production starts that typically, over the short run, ______________ regardless of the level of production.
fixed costs; do not change,
______________ include all of the costs of production that increase with the quantity produced.
______________ occur when the marginal gain in output diminishes as each additional unit of input is added.
Diminishing marginal returns
______________ is calculated by taking the quantity of everything that is sold and multiplying it by the sale price.
In order to determine ______________ , the firm's total costs must be divided by the quantity of its output.
In order to determine the average variable cost, the firm's variable costs are divided by ______________.
the quantity of output
The term ______________ is used to describe the additional cost of producing one more unit.
The term ______________ describes a situation where the quantity of output rises, but the average cost of production falls.
economies of scale
Recommended textbook explanations
Principles of Economics
N. Gregory Mankiw
Krugman's Macroeconomics for AP*
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