U6-Costs of Production Barron's

in the long run, all variables of production are

adjustable

in the short run, the only variable that can be adjusted is

labor

law of diminishing returns states that

marginal product of each new unit diminishes over time

formula for average product

total product / quantity of inputs

marginal product formula

change in output / change in quantity of inputs

formula for total cost

TC = TFC + TVC

formula for average total cost

ATC = AVC + AFC

the marginal cost curve always intersects what at what?

the average total cost and average variable costs at their lowest points

excise tax modifies the curves of what?

average variable cost, average total cost, and marginal cost curve

lump sum tax modifies the curves of what?

average total cost and average fixed cost

what curve is modified by both lump sum tax and excise tax? why?

average total cost. because ATC = AVC + AFC

what curve describes the three economies of scale?

the long run average total cost curve (LRATC)

when is there economy of scale?

when LRATC is decreasing as output increases

when is there constant returns to scale

when LRATC remains constant as output increases

when is there diseconomies of scale

when LRATC goes up as output increases

what is the difference between economic and accounting profit?

economic counts in explicit costs and revenue, BUT ALSO counts in implicit costs

what are usually implicit costs?

how much profit would've been made if another action was pursued

formula for AVC

TVC / Q

formula for AFC

TFC / Q