econ chapter 8 - Custom Scholars
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# econ chapter 8

question
accounting profit
total revenue - explicit cost
question
economic profit
total revenue - explicit costs - implicit costs
question
implicit costs
opportunity costs for self-owned resources
question
explicit costs
costs that require a firm to spend money
question
marginal physical product (mpp)
sum of total output / sum of Q labor
question
average physical product (app)
total output / Q labor
question
when mpp is maximized
mc is minimized
question
total fixed cost (tfc)
all cost that do not change when output changes. tfc is a constant amount at all q levels
question
total variable cost (tvc)
all costs that do change when output changes. tvc gets bigger as q increases because the firm needs more labor to make more output.
question
total cost (tc)
all costs at a given output level. tc is the sum of tfc and tvc. tc increases as the level of output increases.
question
average fixed cost (afc)
fixed cost (capital cost) per unit of output, afc always falls as q rises since tfc is a constant value.
question
average variable cost (avc)
variable cost (labor cost) per unit of output. avc falls at first, and then rises as q increases.
question
average total cost (atc)
total cost per unit of output. it is the sum of afc and avc. atc falls at first, and then rises as q increases.
question
marginal cost (mc)
change in the firm's tc when it produces another unit of output. also shows change in tvc from an extra unit of output. mc falls at first, and then rises as q increases.
question
tfc=
q x afc
(total cost of all fixed factors of production)
question
tvc=
q x avc
(total cost of all variable factors of production)
question
tc=
tfc + tvc, or q x atc
question
afc=
tfc/q
question
avc=
tvc/q
question
atc=
tc/q, or afc + avc
question
mc=
^tc/^q, or ^tvc/^q (because the only part of tc that changes when q is produced is tvc)
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question
accounting profit
total revenue - explicit cost
question
economic profit
total revenue - explicit costs - implicit costs
question
implicit costs
opportunity costs for self-owned resources
question
explicit costs
costs that require a firm to spend money
question
marginal physical product (mpp)
sum of total output / sum of Q labor
question
average physical product (app)
total output / Q labor
question
when mpp is maximized
mc is minimized
question
total fixed cost (tfc)
all cost that do not change when output changes. tfc is a constant amount at all q levels
question
total variable cost (tvc)
all costs that do change when output changes. tvc gets bigger as q increases because the firm needs more labor to make more output.
question
total cost (tc)
all costs at a given output level. tc is the sum of tfc and tvc. tc increases as the level of output increases.
question
average fixed cost (afc)
fixed cost (capital cost) per unit of output, afc always falls as q rises since tfc is a constant value.
question
average variable cost (avc)
variable cost (labor cost) per unit of output. avc falls at first, and then rises as q increases.
question
average total cost (atc)
total cost per unit of output. it is the sum of afc and avc. atc falls at first, and then rises as q increases.
question
marginal cost (mc)
change in the firm's tc when it produces another unit of output. also shows change in tvc from an extra unit of output. mc falls at first, and then rises as q increases.
question
tfc=
q x afc
(total cost of all fixed factors of production)
question
tvc=
q x avc
(total cost of all variable factors of production)
question
tc=
tfc + tvc, or q x atc
question
afc=
tfc/q
question
avc=
tvc/q
question
atc=
tc/q, or afc + avc
question
mc=
^tc/^q, or ^tvc/^q (because the only part of tc that changes when q is produced is tvc)

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