AP Micro 52-56 Test

profit

Total rev- Total cost

revenue

Price x Quantity

total cost

Implicit + Explicit

implicit cost

Forgone benefits/oppurtunity costs

explicit costs

Monetary Costs

accounting profit

Total Revenue - Explicit Cost

economic prof

revenue - total cost (imp+expl)

if econ profit is pos

the best option is being chosen

econ prof 0

firm cannot do any better using its resources in any other way

econ prof negative

there is a better option

marginal revenue

change in total revenue / change in total output

production function

relationship between Q inputs and Q outputs

in the short run

at least one input is fixed

diminishing returns says

as MORE inputs are employed, and some inputs are FIXED, MARGINAL PRODUCT will FALL

marginal prod of labor formula

change in output / change in labor employed

marginal prod of capital

change in output / change in capital employed

marginal prod of land

change in output / change in land used

total fixed costs

quantity x avg fixed costs

total variable costs

quantity x avg variable costs

total cost

quantity x avg variable cost OR total fixed + total variable

avg fixed costs

total fixed / quantity

avg variable

total variable costs / quantity

avg total costs

change in total cost / quantity

marginal cost

change in total cost / quantity OR change in variable cost / quantity

the graph of marginal cost

falls early in production bc of specialization but rises with more output because of diminishing marginal returns

total product curve

shows how output changes as input changes