accounting total cost Answer explicit costs only
economic total cost Answer accounting total cost + implicit costs
economic total cost is opportunity cost
accounting profit = Answer total revenue - accounting total costs
economic profit = Answer total revenue - economic total costs
w...
ECO 201 Miami University Exam 3 questions
with correct answers
accounting total cost Answer✔✔ explicit costs only
economic total cost Answer✔✔ accounting total cost + implicit costs
economic total cost is opportunity cost
accounting profit = Answer✔✔ total revenue - accounting total costs
economic profit = Answer✔✔ total revenue - economic total costs
when economic profit = 0 Answer✔✔ normal economic profit; means that the firm
is doing as well as it could in it's next best alternative
economic profit > 0 Answer✔✔ firm's owner is doing better than she/he could in
her/his next best alternative
economic profit < 0 Answer✔✔ firm's owner is doing worse than she/he could in
his/her next best alternative
short run Answer✔✔ period of time so short that capital is fixed.
firms can change output ONLY by changing the number of workers hired, NOT by
changing factory size
, L represents Answer✔✔ labor
N represents Answer✔✔ natural resources
K represents Answer✔✔ capital
in the short run... Answer✔✔ Q=f(L) because capital is fixed
marginal product of labor = Answer✔✔ change in quantity / change in labor
tells us how output changes as the firm hires an additional worker
fixed costs (FC) Answer✔✔ costs that do not change as output changes (rent)...
only exist in the short run
variable costs (VC) Answer✔✔ costs that vary as output changes (labor costs). VC
goes up as Q goes up. VC goes down as Q goes down.
Total cost = Answer✔✔ Fixed costs + variable costs
marginal cost (MC) = Answer✔✔ change in total cost / change in quantity
average fixed cost Answer✔✔ fixed cost per unit = FC / Q
continuously declines as output rises
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