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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
Note
Flashcard