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24 Cards in this Set
- Front
- Back
profits (πE versus πA) |
TR - TCA - opportunity costs
TR - TCA |
|
constant returns |
∆Y/∆X is constant
output increases at constant rate
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increasing returns |
∆Y/∆X is positive and increasing
output increases at increasing rate |
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decreasing returns |
∆Y/∆X is positive but decreasing
output increases at decreasing rate |
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negative returns |
∆Y/∆X is negative output is decreasing |
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immediate run |
all inputs fixed |
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short run |
≥ 1 input is fixed |
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long run |
all inputs are variable
length of long run = amount of time it takes for all inputs to become variable |
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TPP |
output vs 1 variable input
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APP |
Y/X
average productivity per unit variable input |
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MPP |
∆Y/∆X
additional TPP gained from one additional unit input |
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marginal analysis |
additional ____ gained from one additional unit input
compares benefits and costs of every activity, one unit at a time |
|
AC = ATC
AFC
AVC
|
TC/Y, overall cost per unit output
TFC/Y
TVC/Y or P1/APP |
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TR |
Py * Y |
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Fixed Costs (TFC)
vs
Variable Costs (TVC) |
do not vary with level of output (more inputs = same amount outputs)
vary with level of output (more inputs = more outputs); Law of Diminshing Marginal Returns
|
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MC |
∆TC/∆Y or P1/APP
cost of producing one additional unit output |
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typical average & marginal cost curves per unit costs - (ATC, AVC, AFC, MC) |
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relationship between TC & TPP (productivity) |
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per-unit productivity (APP, MPP)
vs
per-unit costs (ATC, MC) |
|
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typical average cost curves (AC, MC, AVC) |
one where costs decrease then increase |
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constant cost firm |
AC & MC are same for all units output |
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decreasing cost firm |
per unit costs decrease with increasing output
MC < AC so avg costs being pulled down |
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increasing cost firm |
per unit costs increase with increasing output
MC > AC so avg costs being pulled up |
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TC |
TC = TFC + TVC
typically increases at decreasing rate, then increases at an increasing rate due to diminishing marginal returns |