Studied by 7 people
Allocative efficiency
marginal cost = marginal value
Marginal cost
cost of producing one more unit
Marginal value
value of one more unit
Technical efficiency
reached when economy’s factors of supply are used to maximize production
Marginal product
additional output produced per period when one more unit of an input is added
Law of diminishing marginal returns
as one amount of an input increases, marginal returns will eventually decrease
Total product curve
shows relationship between total amount of output produced vs. number of units of an input used
Fixed costs
do not change when more output is produced
Variable costs
do change when more output is produced
Short-run
time frame where at least one factor of production is constant
Long-run
all factors of production are variable, no fixed costs
Economies of scale
exist over range of output where long-run average cost curve slopes down
Profit
value remaining after paying all costs and financial obligations of a company
Gross profit
total sales - total cost of goods/services
Operating profit
gross profit - operating expenses
Net profit
amount left after deducting all other expenses
Break-even points
points on graph where total revenue = total cost
Profit maximization
loss minimization
Economic profits
total revenue - total cost
Note 
Flashcard (78)