ECON 2113 Study Guide - Final Guide: Average Variable Cost, Average Cost, Marginal Revenue
Document Summary
Economic profit is the difference between total monetary revenue and total costs (including explicit/implicit costs, opportunity costs) and is therefore lower than accounting profit. Accounting profit is the difference between total monetary revenue and total cost (explicit costs); this is the bookkeeping profit. A mathematical function that relates the maximum amount of output that can be obtained from a given number of inputs, generally capital and labor. Fall in the amount of output produced as one input increases but others remain constant. A firm"s costs of production includes fixed and variable costs. Fixed costs include things like rent, buildings, and equipment. Variable costs include input costs like wages, materials, and utilities . Differentiate between average total, average fixed, average variable, and marginal costs. Average total cost is the total cost divided by the quantity of output. Average fixed cost is fixed cost divided by the quantity of output.