CHAPTER 13 ECON NOTES.
All costs can vary in the long-run
An example of explicit costs are the payments made by the firm to others
An example of implicit costs is the opportunity cost of resources owned by the
A firm’s economic profit is equal to the difference between its revenues and its
Variable cost in the short-run: a new wing on the plant (?)
What best characterizes fixed costs is that they are costs that do not vary with
Marginal cost is the increase in total cost that arises from an extra unit of
Economies of scale explain why average cost declines in the long run
As production increases, a unit’s share of fixed costs continually decreases as
output increases (… doesn’t it stay constant??)
Average cost is best defined as TC / Q
Marginal cost equals ATC at its min
The marginal product is essentially the additional unit of output per unit of input
Describe the relationship between diminishing marginal product and marginal cost.