Accounting Profit - Total Revenue - Explicit Costs
Average Fixed Cost - Total Fixed Costs / Quantity Produced
Average Total Cost - Total Costs / Quantity Produced
Average Variable Cost - Total Variable Costs / Quantity Produced
Barriers to Entry - things that make it difficult for new firms to enter a market
Constant Marginal Returns - stage when the marginal product of an input is the same as that of the previous one
Constant Returns to Scale - flat long-run average total cost as quantity produced increases
Differentiate - to make your product different from your competitors' products
Diminishing Marginal Returns - stage when the marginal product of an input is less than that of the previous one
Diseconomies of Scale - rising long-run average total cost as quantity produced increases
Economic Profit - Total Revenue - Explicit Costs - Implicit Costs OR Accounting Profit - Implicit Costs
Economies of Scale - falling long-run average total cost as quantity produced increases
Explicit Costs - the money that a person spends to do something, or that a business spends on its operations
Fixed Costs - costs that do not depend on how much you produce
Implicit Costs - the opportunity cost, measured in dollars, of what a person or business chooses to do
Increasing Marginal Returns - stage when the marginal product of an input is greater than that of the previous one
Input - the quantity of things used to produce output
Long-run - the time period in which we can change all of our inputs/costs
Marginal Revenue - the additional revenue earned from producing one more unit
Marginal Cost - the additional cost of producing one more unit
Marginal Product - The additional output created by adding one more input to the production process
Negative Marginal Returns - stage when adding more inputs decreases the total output
Non-Price Competition - trying to increase sales by doing things other than change your price (e.g. advertising)
Normal Profit - zero economic profit (accounting profit = implicit costs), also known as "break-even"
Output - the quantity produced
Perfect Competition - a market structure with many, small firms selling identical products and low barriers to entry
Price-taker - a firm that must accept the market price rather than choosing the price it wants to sell at
Production Function - a graph showing the relationship between inputs and outputs
Revenue - the money a business receives from selling its product
Short-run - the time period in which at least some inputs/costs cannot be changed
Total Product - the total number of units produced by a quantity of inputs
Variable Costs - costs that change based on how much you produce