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Ap Econ unit 3
| Term | Definition |
|---|---|
| Total Revenue | the amount a firm receives for the sale of its output |
| Total Cost | the market value of the inputs a firm uses in production |
| Profit | total revenue minus total cost |
| Explicit Costs | input costs that require an outlay of money by the firm |
| Implicit Costs | input costs that do not require an outlay of money by the firm |
| Economic Profit | total revenue minus total cost, including both explicit and implicit costs |
| Accounting Profit | total revenue minus total explicit cost |
| Production Function | the relationship between the quantity of inputs used to make a good and the quantity of output of that good |
| Marginal Product | the increase in output that arises from an additional unit of input |
| Diminishing Marginal Product | the property whereby the marginal product of an input declines as the quantity of the input increases |
| Fixed Costs | costs that do not vary with the quantity of output produced |
| Variable Costs | costs that vary with the quantity of output produced |
| Average Total Costs | total cost divided by the quantity of output |
| Average Fixed Costs | fixed cost divided by the quantity of output |
| Average Variable Costs | variable cost divided by the quantity of output |
| Marginal Costs | the increase in total cost that arises from an extra unit of production |
| Efficient Scale | the quantity of output that minimizes average total cost |
| Economies of Scale | the property whereby long-run average total cost falls as the quantity of output increases |
| Diseconomies of Scale | the property whereby long-run average total cost rises as the quantity of output increases |
| Constant Returns to Scale | the property whereby long-run average total cost stays the same as the quantity of output changes |
| Competitive Market | a market with many buyers and sellers trading identical products so that each buyer and seller is a price taker |
| Average Revenue | total revenue divided by the quantity sold |
| Marginal Revenue | the change in total revenue from an additional unit sold |
| Sunk Cost | a cost that has already been committed and cannot be recovered |
Created by:
miller.shelby155
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