10 terms

Marginal Cost

The incremental cost of the last unit produced. Also, the first derivative of total cost with respect to quantity

Variable Cost

Costs that change with the quantity produced

Fixed Cost

Costs that do not change with the quantity produced. You can think of this as the costs of being in business. Costs that are fixed in the short term might possibly be variable over a longer time frame in which changes can be made to reorganize how a business operates.

Total Cost

The sum of fixed and variable costs for a given quantity produced

Average Cost

Cost divided by the quantity produced. Types of average cost include average total cost, average variable cost, and average fixed cost.

Marginal Revenue

The incremental revenue of the last unit sold. Typically, the marginal revenue is a constant, the market price of a product or service. Also, The first derivative of total revenue with respect to quantity. Typically, the marginal revenue is a constant, the market price of a product or service.

Total Revenue

The sum of the prices for the quantity sold. Because in most situations there is a constant market price, the total revenue is usually price times quantity.

Marginal Profit

The incremental profit of the last unit sold. This is often computed as marginal revenue minus marginal cost. Also, The first derivative of total profit with respect to quantity. This is often computed as marginal revenue minus marginal cost.

Total Profit

The sum of the profit for the quantity sold. This is often computed as total revenue minus total cost.

Demand Curve

A chart or formula of the relationship between price and quantity demanded