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Econ Midterm 1
From Notes
| Question | Answer |
|---|---|
| Short-Run Production | Period of time so short that at least 1 input is fixed and cannot be varied in amount. |
| Long-Run Production | Period of time long enough that all inputs can be varied in amount. |
| Production Functions | Relates the amount of output to the amount of input. |
| Marginal Product Definition | Increase in total product that results when one additional worker is hired. |
| Marginal Product Formula | %Change TP/ %Change Labor |
| Law of Diminishing Marginal Returns | As a variable input is increased holding the other input constant, beyond some point the marginal product will decline. |
| Economic Profit (pi) | Total revenue - Total Cost |
| Sunk Cost | A cost that cannot be recovered at the time a decision is made (should be ignored). |
| Explicit Costs | Involve actual $$$ payment for something; "cold hard cash." |
| Implicit Costs | Wage or salary given up; "figurative $$$." |
| Marginal Cost Definition | Increase in total cost that results when one additional unit of output (TP) is produced. |
| Marginal Cost Formula | %Change TC/ %Change Quantity |
| Total = | Average * Quantity |
| Average = | Total/ Quantity |
| TC Formula | TC = TFC +TVC |
| TFC Formula | TFC = TC - TVC |
| AFC Formula | AFC = TFC/Q |
Created by:
whaleydrew
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